IPO Meaning in Share Market

What Is IPO:

We all know something about investing in the share market. Today, we will learn about what is IPO in share market through this article. Any investor can buy shares of a company through primary or secondary market. The primary market is where an investor can buy shares of a company that are issued for the first time through the process of IPO. What is IPO mean? Any company that needs money or capital for its growth and development would choose the route of IPO. When you as an investor buy shares of the company, you become a shareholder of the company. The price of the share you hold rises and falls due to various factors that affect the company. If you have a dream of buying a home in the next 10 or 15 years, you can invest in a good company for a long term. You can achieve your goal of buying a house at the defined time horizon.

IPO basics:

Let us learn the important terms in IPO.

Offer Document:

This document gives all basic information like the promoters of the company, the financial condition, objectives of initial public offering, etc.

Red Herring Prospectus:

This term is used to refer an offer document in case of a book built issue. All details except the price and number of shares are given in this document.

Letter of Offer:

An offer document of a rights issue of shares is called as the letter of offer.

Fixed Price Issue:

In this method, the issue price is decided by the issuer and it is mentioned in the offer document.

Book-built issue:

It is an efficient way by which price of an issue is found out on the basis of demand from the investors.

Price Band:

The price range within which the investors can bid in an IPO is called as price band. The difference between floor price (minimum price at which an investor can bid) and the cap price (the maximum price at which an investor can bid) should not be more than 20%.

Cut-off price:

The price at which the shares will be offered to investors is called cut-off price.

What is IPO investment?

It’s an opportunity by which even common investors get to invest in a company. What is IPO shares? You may have various life goals such as buying a car, home, higher education for children, children’s marriage expenses, etc. To meet all these goals, you should have a proper financial planning. It simply means that you have to invest your money in some financial assets that will give you higher returns. Just click to know about top performing IPOs, upcoming IPOs, etc. Initial public offering is one kind of investment product which you can use for long term investment purpose. What is IPO? It’s a process by which both the issuer company and investors are benefitted. The company gets the required capital when the investors buy shares and in turn, the investor can use it for achieving his or her life goals. Liquidity is high in case of shares as you can sell it whenever you are in need of money on the exchange through the broker. Hope you understood IPO definition now. Open your demat account now to invest in the best upcoming initial public offering.