Initial Public offer (IPO) is the first step by the corporate to go public for raising funds. Company raise cash for various corporate purposes like expansion of capacities, repayment of existing loans, setting up new projects, divesting promoter holding, exit to shareholders, listing etc.,
If the corporate has never issued equity to the general public, it’s called an initial public offer. Going public helps raises money, and usually a lot of it. Being in public listed also opens several financial doors.
Due to the increased scrutiny, public corporations can usually get better rates once they issue debt.
As long as there’s market demand, a public company will always issue more stock. Thus, mergers and acquisitions are easier to do because a stock can be issued as a part of the deal.
Trading within the open markets means liquidity. This makes it possible to implement things like employee stock ownership plans, that facilitate to attract prime talent.
IPO is simply selling stock. It’s all about the sales job. If you’ll convince people to buy stock in your company, you’ll raise plenty of money.
When a corporation desires to go public, the primary issue it does is hire an investment bank.
The company and the investment bank can initial meet to negotiate the deal. things usually discussed include the amount of cash a corporation can raise, the type of securities to be issued and all the details in the underwriting agreement
In a best efforts agreement, however, the underwriter sells securities for the corporate, however, doesn’t guarantee the amount raised. Also, investment banks are hesitant to shoulder all the risk of an offering. Instead, they form a syndicate of underwriters. One underwriter leads the syndicate and the others sell a part of the issue.
Once all sides agree to a deal, the investment bank puts together a registration statement to be filed with the SEC
The SEC then needs a cooling off period, in which they investigate and ensure all material data has been disclosed. Once the SEC approves the offering, a date (the effective date) is set once the stock will be offered to the general public.
As the effective date approaches, the underwriter and company sit down and decide on the price. This isn’t a simple decision: it depends on the corporate, the success of the road show and, most significantly, current market conditions. Of course, it’s in each parties’ interest to get the maximum amount as possible.
Finally, the securities are sold on the exchange and the cash is collected from investors.
Short brief on IPOs
An initial public offer (IPO) is the initial sale of stock by a corporation to the general public.
Broadly speaking, corporations are either non-public or public. Going public means that a corporation is a shift from non-public ownership to public ownership.
Going public raises money and provides several benefits for a corporation.
Getting in on a hot initial public offer is extremely difficult, if not impossible.
The process of underwriting involves raising cash from investors by issue new securities.
Companies hire investment banks to underwrite an initial public offering.
The road to an initial public offering consists mainly of putting together the formal documents for the Securities and Exchange Commission (SEC) and selling the issue to institutional clients.
The only way for you to get shares in an initial public offering is to have a frequently traded account with one of the investment banks in the underwriting syndicate.
An initial public offering company is difficult to analyze because there isn’t a lot of historical information.
Lock-up periods prevent insiders from selling their shares for a certain period of time. the end of the lockup period will put strong downward pressure on a stock.
Road shows and red herrings are marketing events meant to get as much attention as possible. Don’t get sucked in by the hype.
A tracking stock is created when a corporation spins off one of its divisions into a separate entity through an initial public offering.
Don’t consider tracking stocks to be the same as a normal initial public offering, as you’re essentially a second-class shareholder.
Product Offerings in IPOs
IPOs: an initial public offering, or IPO, is the initial sale of stock by a corporation to the general public. a corporation can raise cash by issuing either debt or equity. If the corporate has never issued equity to the general public, it’s called an initial public offering
Corporate fixed Deposits: corporate mounted deposits are fixed deposits offered by corporate companies. the corporate fixed deposits work like the regular bank fixed deposits albeit a couple of changes. corporate fixed deposits offer a higher rate of interest compared to bank fixed deposits because the risk involved is higher when it comes to corporate fixed deposits. The tenure period of a corporate fixed deposit usually ranges between 1-3 years.
NCDs: Non-convertible debentures (NCDs) are debt instruments with a fixed tenure issued by corporations to lift cash for business purposes. unlike convertible debentures, NCDs can’t be converted into equity shares of the issuing company at a future date.
Tax-Free Bonds: A bond is a fixed income instrument carrying a coupon rate of interest and is issued for a fixed tenure. as the name suggests, interest earned from tax-free bonds is exempt from tax. The interest income earned is exempt from tax under Section 10 (15) (iv) (h) of the Income TaxAct, 1961
Capital Gain Bonds (U/s 54EC): There are instruments like capital gain bonds, in which the profit arising from the sale of a property can be invested. These have a lock-in period of 3 years and the maximum limit for investing in such instruments is Rs. 50 lakhs”. These bonds are presently being issued by NHAI and REC
SME Issues: Listing is an initiative to prepare SME s for IPO and Listing, reduce listing costs to the lowest possible, and with the help of our expert professionals, provide assistance in every possible way in a listing of SME s on both BSE and NSE Platforms.
GOI 8 May 1945 Savings taxable Bonds (2003): The 8 may 1945 Government of India Savings (taxable) bonds, 2003 is a bond issued by the reserve bank of India (RBI) commencing April 21, 2003. The bonds are available for purchase by individuals on tap i.e. you can purchase them as and once needed. as the name indicates, the rate of interest offered on the bond is 8 may 1945 every year.
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In terms of total no of applications procured we stood No. 15 in Equity (1/4/14 to 31/3/2015) source: Prime database
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Company Fixed Deposits
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