WHAT IS AN IPO?
• A corporate may raise capital in the primary market by way of an initial public offer,
rights issue or private placement. An initial public offer (IPO) is the selling of
securities to the public in the primary market. It is the largest source of funds with
long or indefinite maturity for the company.
• An ipo is an important step in the growth of a business. It provides a company
access to funds through the public capital market.
• An ipo also greatly increases the credibility and publicity that a business receives.
In many cases, an IPO is the only way to finance quick growth and expansion.
• In terms of the economy, when a large number of IPO are issued, it is a sign of a
healthy stock market and economy.
TYPES OF IPOS
• There are two types of ipos. They are dependent upon the type of
price generation the company or the underwriter is going for. These
are of two types:
• In fixed price offering, the company decides on the price of the stocks
initially, and any buyer or investor pays that amount per share to obtain
the desired number of stocks.
• In book building ipo, the company decides the price band of the
forthcoming ipo where the floor price is the minimum, and the cap
price is the maximum, and the bidding is done within this range. The
price is set by the underwriter and the company's investors with
surveys done on what would be the value of the share. The bids are
made, and the selected investors get the stocks.
TYPES OF INVESTORS:
• Qualified institutional buyers (QIB): these are big investment firms, mutual
funds, a scheduled commercial bank, along with a few other institutions that
have been registered with SEBI.
• Retail individual investor (rii): these are individual investors who apply or
place bids for shares with a cumulative value not exceeding 2 lakh rupees.
• Non-institutional investors: these are investors other than qib and retail
investors. These include high net worth individuals (HNI) or corporate
THINGS TO REMEMBER WHILE INVESTING IN AN
1) Study the company, its background, financials, future aspects
before you invest in the IPO.
2) Note the ipo locking period. The locking period is a duration in
which you cannot sell or trade the stocks after an initial
3) Always plan an investment strategy before investing in any ipo.
HERE IS A LIST OF STOCKS THAT SAW THE HIGHEST LISTING
GAINS IN 2022-