How IPO is launched in market

Initial public offering i.e. IPO is introduced in market through several processes.But before starting this, one must know what IPO is and why companies issue IPO.


An initial public offering (IPO),referred to as an “offering” or “flotation” , is a process where a company (called the issuer)issues shares to the public for the first time.
They are often used by smaller,younger companies seeking capital to expand , but can also be done by large privately owned companies seeking to become publicly traded
A follow-on offering (often called secondary offering) is an issuance of stock subsequent to the company’s initial public offering

An IPO is a process where a company issues shares to public at first time. By issuing share it simply means the company is selling ownership or sharing its ownership with the public or investors at large.The public or investors buy this ownership and this way company raises its capital.
This offering is often done by smaller or younger companies seeking to raise capital to expand. e.g. If you have a company and if your business is doing well,you want to setup some more factories. But in that case you need to have capital. The question is how would you get this capital. Suppose you have already taken a lot of the loans from bank and other places and don’t want to take it anymore loans i.e. That you don’t want to add to your debts. Now what you can do is, you can sell part of the ownership of your company to the public at large , the public will buy that ownership by buying your shares and in this way you get the required capital and you can set up additional factories you wanted .
This is why younger companies looks for issuing IPOs.


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