IPO: Initial Public Offering
Initial Public Offerings are a way by which the company raises capital for its operations. This is the only stage in which the company gets money in return for giving a part of its ownership to the public. The issuer who wants to offer an IPO first files detailed information as per SEBI rules and gives out a subscription offer.
Initial Public Offering (IPO) happens when a fresh unlisted company offers its share to the public. This is guided and monitored by Securities Exchange Board of India (SEBI). Most companies filing for a IPO are fresh companies looking for capital to expand its operations. Investors in these companies generally take a large risk in investing in these companies since there is a mighty chance that the IPO might fail and investors loose a lot of money in the process.
The process of applying for a IPO is very easy these days with the advent of DEMAT accounts and online trading options. Legally an IPO is open for minimum of 3 days upto 21 days except for those which are underwritten by India financial institutions which is open for 10 days. Usually we have to file an application for the IPO and send is along with the payment usually in Demand Drafts, Online Fund Transfer or Cheques. With an online trading account with ICICI or others, its easy to apply for one and have the funds transfered directly from your ICICI bank account linked to your DEMAT account.
