IPO stands for Initial Public Offering. It happens when a private company offers its shares to the public for the first time. Before an IPO, the company’s shares are only owned by the founders and a few investors. After the IPO, anyone can buy and sell these shares in the stock market.
IPO Definition & How It Works
An IPO allows a company to raise money by selling part of its ownership to investors. This is helpful when the company needs funds to expand, pay off debts, or improve its business. When a company decides to go public, it works with banks and financial experts to set a price for each share. The shares are then listed on a stock exchange like the NSE or BSE in India.
Why Do Companies Choose an IPO?
A company might choose an IPO to grow faster. It can use the money raised from selling shares to invest in new projects or products. An IPO also gives the company more visibility, which can attract more customers. After the IPO, the company is required to share its financial details with the public, which increases transparency.
