An initial public offering (IPO) is the initial sale of shares by a company to the public.
Broadly speaking, companies are either private or public. Going public stands for a company is changing from private ownership to public ownership.
Going public raises funds and offers several advantages for a company.
The dotcom growth decreased the bar for companies to carry out an IPO. Many startups went public without any income and little more than a business plan.
Getting a hot IPO could be very hard, if not impossible.
The process of underwriting involves raising funds from investors by issuing new securities.
Companies hire investment banks to underwrite an IPO.
The path to an IPO consists primarily of assembling the formal written documents for the Securities and Exchange Board (SEBI) and selling the issue to institutional customer.
The only way for you to get shares in an IPO is to have a frequently traded account with one of the investment banks in the underwriting syndicate.
An IPO company is difficult to analyze because there isn’t a lot of historical info.
Lock-up periods prevent insiders from selling their shares for a certain period of time. The end of the lock-up period can put strong downward pressure on a stock.
A tracking stock is created when a company spins off one of its divisions into a separate entity through an IPO.