Initial Public Offering (IPO)

Investments can help you grow your wealth and keep up with the inflation. Thankfully, there is a wide array of options, tailored to match your preferences and your profile. 

 

One investment option that you could look into is an IPO or Initial Public Offering. There are numerous types of IPO you can choose from and diversify your investment portfolio to minimise risk. Read on to learn what an IPO is, its types, and more.

An IPO, is the process by which shares of a previously privately held company are made available to the general public to invest in for the very first time. It is a win-win situation for both the issuing company as well as the investors. 

 

Opening up shares to the public aids the issuing company to generate capital that can be used towards its various business operations. This shift from a private entity to a public entity is a great opportunity for the stakeholders to realise their investment gains. 

 

Simultaneously, it also offers the public with a promising investment avenue that can offer great returns on investment and help them diversify. 

Check out the various types of IPOs that issuing companies offer -z

1. Fixed Price Offering

In a fixed price offering, the issuing company determines the value of the offerings with the assistance of underwriters. The evaluation of the price is done on the basis of both qualitative and quantitative factors, including the company's finances. 

 

In a fixed price offering, the price is mostly lower than the market value.

2. Book Building Offering

In a book building offer, there is no definitive price and a price range or band replaces it. The lowest value is called the floor price, and the highest value is called the 'cap price'. You can bid with your preferred prices. Here, the final stock price is determined by the issuing company after evaluating the applications and bids.