Whether you’re a seasoned investor or a newcomer to the stock market, understanding Initial Public Offerings (IPOs) can open up exciting opportunities.
What is an IPO?
When a private company offers its shares to the public for the first time, it is known as an initial public offering of IPO. It allows companies to raise capital from public investors.
Once the IPO is complete, the company’s shares are listed on a stock exchange, and anyone can buy or sell those shares.
Issuer
It is the company offering its shares to the public for the first time through an IPO. The company then transitions from being privately held to publicly traded.
Underwriter
The underwriter can be a financial institution, investment bank or a broker that helps the issuer bring its shares to the market.
Price band
It is the range within which the IPO shares are offered to the public. The price band indicates the minimum and maximum price at which investors can bid for the shares during the IPO.
Listing gains
The practice of buying shares in an IPO and selling them quickly after the shares list on the stock market. Investors flip shares to capitalise on the initial share price.
Draft Red Herring Prospectus (DRHP)
A preliminary document filed by the issuer with SEBI before the IPO. DRHP is made available to the public for review and feedback.