IPO – Initial Public Offering

Disclaimer: Investment/Trading in the securities market such as initial public offering- IPO is subject to market risk, past performance is not a guarantee of future performance. Associate companies do not guarantee any returns in any of its products or services.

Introduction

When a company sells its shares to the public for the first time it’s called an Initial public offering (IPO). Majorly companies sell shares to the public to raise funds for business expansion. Then the people who buy the shares and invests in the company IPO become the shareholders of the company. Altogether the entire process of selling shares and giving shareholding to the public is an initial public offering. Now let’s try to understand some frequently asked questions about IPO. Like, Why does a company sell its own share? or Why the company needs to apply for an Initial public offering. (Click here to open your Demat account with Kite Zerodha  – Join Zerodha)

Why IPO?

There can be multiple reasons for a company to apply for an ‘IPO’ initial public offering. Majorly when a company needs to grow or do its expansion it tries to raise money from the market or from the public. Secondly, if the company is under huge debt and is not able to raise funds on its own, such a company opt-out for options like Initial public offering. Thirdly, If the company is in the process of launching a new product and needs huge capital for the production to meet the demand and supply of the product, again IPO is issued by the company to raise the required funds for the business expansion.

There are also different ways to raise funds from the market such as – Angel Investors, venture capital, or the company also can apply for a loan from the bank or institution to raise funding for its business expansion. Let’s get a better understanding of the Initial public offering with some recent examples.

Example 1

Rossari Biotech IPO – It is a textile and chemical manufacturing company. IPO was issued for an expected amount of around Rs 500 crores for business expansion. In order to issue its IPO, the company needs to first get approval from SEBI (securities and exchange board of India). Check the link Rosari Rossari Biotech RHD for Draft Red Herring Prospectus.

 

Example 2

Mindspace REIT IPO – The Real Estate Investment Trust (REIT) is a known real estate business company for owning and leasing out real estate properties across the 4 cities i.e Mumbai, Chennai, Hyderabad, and Pune. This is another example of a business expansion IPO. In this case, the initial public offering amount is about Rs 4500 crore. Check the link Mindspace REIT IPO D(RHD) for Draft Red Herring Prospectus.

 

Steps to Apply for IPO with Zerodha

Firstly, if you don’t have a Demat account then click on Kite – Zerodha to open your Demat Account with one of the leading stock market investment platforms. Secondly, click on the link – Apply for IPO to buy initial public offering with Zerodha. Finally, select the IPO you need to invest in, read about the company’s detailed offerings before investing your money. Follow the link mentioned in the above two examples of Rossari Biotech IPO and Mindspace REIT IPO for a better understanding of company offerings.

Upcoming IPOs

Click on the link for Upcoming IPOs to apply for initial public offering with the Zerodha trading platform. Subscribe our blog for more interesting and detailed information related to Sharemarket and how to do investment in the Indian stock market.

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