What is Initial Public Offering (IPO)?

What is Initial Public Offering “IPO”

An Initial Public Offering (IPO) is a process where a private company issues shares to the public for the first time, it could be a new young company seeking capital to expand, or a large private company that decides to listed on the stock exchange.

Initial Public Offering (IPO) is a mechanism for an unlisted company to raise funds from the primary market. It helps companies to raise equity capital by issuing new shares to the public or the existing shareholders can sell their shares to the public without raising any fresh capital.

After (IPO), the company’s shares can traded in an open market. Those shares can be further sold by investors through the secondary market.

Reasons for IPO

• To raise funds from the public for financing capital expenditure needs, Example; – Expansion, Diversification, etc…
• To repayment of Debt.
• To provide liquidity to the existing shareholders by listing on the stock exchange.
• To establishes the Value of the company.
• To fiance increased working capital need.
• To increase the prestige and public image