The initial public offering (IPO), is a process by which a private company can sell its shares to the public in general, it can be a new company or an old company, which is an exchange And therefore it becomes public. Here a company has to be public or public means that now the shares of this company can be issued to the public and these people can buy and sell them in the stock market

With the help of IPO, companies can raise equity capital by issuing new shares in public, or the existing shareholders can sell their shares to the public without increasing the company's capital. The government can also sell its stake to the public in public sector companies by the IPO. If the company wants to increase its business, instead of taking a loan, IPO can be a better option for raising capital. But for this, the promoters should also have the confidence that the company will be able to do so much business from the increased capital that it can give better returns on the increased capital. After raising the capital, the likelihood of the increase in the company's growth will increase manifold with the help of increased capital. The IPO may also be on the face value and also on the premium value.

In an IPO where the company which offers its shares is called 'Issuer' i.e., Companies release their IPO with the help of investment banks. After the IPO, the shares of the company are traded in the open market, those shares can be bought and sold by the investors through the secondary market. Here is the information that the sale of shares in the IPO is called the sale in the primary market and after the listing, the sale of shares in the stock market is called the sale in the secondary market.

Must Read Prospectus
The IPO issuing company issues prospectus for it. It should be carefully read before investing. All information about the company and IPO is given in Prospectus. By reading this you can understand where the company will use increased capital. With this, can you predict whether the company will be able to raise better returns than its increased capital? Before investing, also check the previous record of promoters and know the opinions of experts on the IPO.

Author's Bio: 

I Manisha, Market researcher highlighting the topic of "What is IPO & How to Invest in IPO" Also, we provide stock trading tips and Free Nifty Tips