An Introduction to IPO
IPO is the condensed form of Initial Public Offering. IPO marks the important moment that allows private companies to make transition into publicly traded establishments by making shares available to the public for a purchase. This gives a boost to equity capital from investors.
The transformative process gives a push to a company’s status to that of a public enterprise and also provides astute investors with an opportunity of reaping significant potential returns on their investment.
Different Types of Initial Public Offering
Fixed Price Offering: Fixed Price IPO requires companies to mark a pre-set price for the initial sale of their shares. Before the offering starts, investors receive messages regarding the stock prices that the companies set.
After the offering ends, the demand for the Fixed Price shares becomes apparent. Investors taking part in fixed type IPO need to pay the full price of the shares upon applying for these.
Book Building Offering: Book Building IPO involves companies offering a price band, allowing investors to bid on the shares within the limit. Interested investors submit their bids mentioning the number of shares they intent to buy and the price they want to pay per share.
