Opt for Initial Public Offering (IPO) Funding
Companies are formed to produce and sell goods and services. It takes manpower as well as capital for companies to be able to achieve this target. Closely held smaller companies find it a bit difficult sometimes to have all the working capital they need. This is when they face the need for borrowed funds. For this reason, most companies approach the public. They raise money in the stock market by either selling equity or raising debt. People who purchase the shares stock of the companies or their debentures are the investors who hold transferable shares and debentures in which they further trade on the stock market to earn the returns on their investments.
Public and private companies
To understand IPO in India, it is important to understand public and private companies. Companies can be public as well as private. Private companies are closely held with few shareholders and less compliance requirements. Most privately held companies are small in size. Some privately held companies are sizeable as well, for example, Domino's pizza.The general public usually doesn't invest in private companies, as they usually do not sell any shares. Public companies on the other hand, are larger corporations that sell their shares to the general public to raise money. Sometimes private companies decide to go for IPO funding as well; and so do public companies looking for expansion.
What is an IPO?
IPO stands for Initial Public Offering. Many companies that wish to raise monies in the Indian markets opt for IPO funding. IPO is when the first time a company sells its stock of shares to the general public. Small and big companies alike issue an IPO to raise capital. Usually the company is assisted by underwriters with their public offering. It is through this process of IPO that a private company becomes a public company as the investor base expands from a few private hands to the general public. When a company €goes public,€ it has to disclose certain information and disclose it in a document called as the prospectus.
What are the benefits and risks of an IPO?
There are several benefits that an IPO in India offers to the company that is going public as well as to the investor. The company gets listed on the stock exchange through an IPO and is able to raise substantial capital from a broad investor base. The company can now boast of an enhanced public image and can create multiple banking opportunities for itself. For the investor too, an IPO makes sense as they only stand to gain when the company does well. Many investors make a good income on the shares of a company that grows manifold after going public and declares handsome profits and dividends. There are also risks associated of course, as there is very little information available in the market about a company as to its viability and / or financial stability since it is only making its first public offering.
Public and private companies
To understand IPO in India, it is important to understand public and private companies. Companies can be public as well as private. Private companies are closely held with few shareholders and less compliance requirements. Most privately held companies are small in size. Some privately held companies are sizeable as well, for example, Domino's pizza.The general public usually doesn't invest in private companies, as they usually do not sell any shares. Public companies on the other hand, are larger corporations that sell their shares to the general public to raise money. Sometimes private companies decide to go for IPO funding as well; and so do public companies looking for expansion.
What is an IPO?
IPO stands for Initial Public Offering. Many companies that wish to raise monies in the Indian markets opt for IPO funding. IPO is when the first time a company sells its stock of shares to the general public. Small and big companies alike issue an IPO to raise capital. Usually the company is assisted by underwriters with their public offering. It is through this process of IPO that a private company becomes a public company as the investor base expands from a few private hands to the general public. When a company €goes public,€ it has to disclose certain information and disclose it in a document called as the prospectus.
What are the benefits and risks of an IPO?
There are several benefits that an IPO in India offers to the company that is going public as well as to the investor. The company gets listed on the stock exchange through an IPO and is able to raise substantial capital from a broad investor base. The company can now boast of an enhanced public image and can create multiple banking opportunities for itself. For the investor too, an IPO makes sense as they only stand to gain when the company does well. Many investors make a good income on the shares of a company that grows manifold after going public and declares handsome profits and dividends. There are also risks associated of course, as there is very little information available in the market about a company as to its viability and / or financial stability since it is only making its first public offering.