These days many people are open to investments and always try to find the best investments to grow their money. Unlike the previous generation, today’s generation is more willing to explore investment options. These days, many of us widely use the internet which makes us well-aware of the investment options. But before investing, it is very much important to invest in the right platform as one invests their hard-earned money. Among many, IPO is a good domain to invest but there are some intricacies, everyone should know.
IPOs known as Initial Public Offerings are a process that allows the company to make money by selling their shares. The public can purchase the shares as an investment through which the public can earn on that investment. Also, this process is followed by the company to convert itself into a public company. When a private company realizes that they are capable enough to handle the Security and Exchange Commission (SEC) and needs more to grow with the help of public offerings, they issue IPOs. Through this, the companies raise money by offering shares to the general public. The IPO can be issued in two markets- primary and secondary markets. The primary market is the situation where the company sells new shares and the secondary market is the market where the shares are resold and repurchased by new people. This is also called the stock exchange. Basically, IPO is raised to issue more capital in the company or to return money to the initial investors.
Following is the step-by-step procedure to issue IPOs:
- Contacting an underwriter or bank- It is important for the company to come in contact with any financial expert. The third party will help you in raising shares by acting as an intermediary between the company and the investors. They will consider all the important aspects which are necessary before issuing.
- Registration of IPO- As per the companies act, it is mandatory for the company to mention all the details like risk factors, business description, financial status, legal information and other related details.
- SEBI verification- After the registration, the SEBI will intervene and look for all the details. They will consider whether all the information is right or not. Once it gets verified, they will allot you the date for issuing IPO.
- Application to stock exchange- You have to write an application to the stock exchange for initial offerings.
- Making people aware- Once the application is made, the company has to create a fizz making sure people are getting aware and show their interest in investing in your shares. This step is basically related to advertising and marketing among the potential investors.
- Set price- The company has to set the share price through Fixed Price IPO or by Book Binding.
- Allotment of shares- After all these formalities, the company is all set to determine the total number of shares to be allotted.
So above is a step-by-step process for IPO. For third party help, you can contact ‘5paisa’ which is a well-known online portal. They will help you with all the details from starting till the end.