Today, through this blog post, we will try to understand What is IPO? If you are new investor, then you must be wondering how to invest in the stock market. So, this is a great opportunity for you, that you can invest in the stock market through IPO.
What is IPO?
When a company issue shares for the first time, that company has to bring IPO in the share market. That company raises funds for the company through IPO, so that the company’s business can grow in future. Before brining IPO, the company has very few shareholders, but after the IPO, the company bring its shares for the people. If you want to invest in any company in the share market, then you must do fundamental analysis of that company. Similarly, before investing money in the IPO of any company, you should know the financial information of that company. Once the IPO of the company is subscribed, the stock of that company is listed on the exchange. And after that, the stock of the company, which is listed on the exchange, those shares are traded by the people.
Types of IPO
Fix Price Offering
Fix price IPO is called issue price. In the stock market, a company sets a fixed price offering for the primary selling of its shares. Due to this, the general investor gets to know the price of share, and the company opens those shares to the public. In fixed price IPO, after the IPO issue closes, you get information in the stock market about the demand for this IPO. If you buy this IPO, then you have to pay the fixed price, fixed by the company.
Book Building Offering
In book building offering, the company which launches the IPO give a 20% price band to the investor. In this book building offering, the interested investor bids on the shares before the final price of the shares is decided. The stock which has the lowest price is called the floor price. And the stock which has the highest price is called the cap price. The final price of the company’s shares is decided by the bids of the investors.
What are the benefits of IPO?
- You get an opportunity to buy the shares at a lower price.
- You get a very good opportunity to invest.
Conclusion
In this article, all you regular readers have been told in detail about What is IPO? And other information about IPO has been given to you. So that you can take proper advantage of IPO in future. We hope that you liked this information very much. So, you will like, share and comment on this article.
FAQ
1. What is IPO?
When a company issue shares for the first time, that company has to bring an IPO in the share market. That company raises money for the company through IPO, so that the company’s business can grow in the future.
2. How many types of IPO are there?
There are two main types of IPOs, Fixed Price Offering and Book Building Offering.
3. What are the benefits of IPO?
Due to IPO, you get the opportunity to buy shares at a lower price, and you get a great chance to invest in IPO.