IPO
Initial Public Offering (IPO) is the event when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. This paves way for listing and trading of the issuer’s securities. The companies are launching more and more IPOs to raise capital for part financing any or all of the following: setting up of new project, expansion/modernization/diversification of existing activities, working capital needs, merger and acquisition etc.
There are two types of IPOs :
1.Fixed Price IPO : where the company and lead manager fix a price.
2.Book Building IPOs : >where the company and the lead manager stipulate a floor price or a price band and leave it to market forces to determine the final prices. These days, companies are coming with IPOs on book building process basis.
When a company floats a public issue or IPO, it prints forms for application to be filled by the investors. The duly complete application from, accompanied by cash, cheque, DD or stock invest should be deposited before the closing date as per the instruction on the form.
Another way is to apply online in an IPO. Online IPO is quicker and easier way to invest in IPOs. It provides freedom from paperwork, convenient to transfer fund for subscription and refund money from/to your bank account. Now you need not to stand in long queues.