About IPO
When a private company decides to go public, it does so through a process called an Initial Public Offering (IPO). This is when a company sells its shares to the public for the first time, allowing individuals and institutions to own a part of the business.
To launch an IPO, a company works closely with investment banks to prepare everything, from conducting thorough research to meeting legal requirements and promoting the IPO to potential investors.
Initially, these shares are typically offered to large investors like hedge funds, banks, and other financial institutions. This makes it harder for regular investors to buy shares during the IPO launch. However, once the IPO is complete and the company is listed on the stock market, anyone can buy and sell its shares.
There are two main types of markets where shares are traded:
- Primary Market: This is where IPOs happen, and the company sells its shares directly to investors for the first time.
- Secondary Market: Once shares are sold in the IPO, they can be traded between investors in the stock market, like the NSE or BSE in India.
In simpler terms, an IPO is the first step for a private company to become public and invite investors to be part of its journey.
