InvestorQ : What exactly is an IPO and why do companies come out with an IPO?
Angel dcosta made post

What exactly is an IPO and why do companies come out with an IPO?

Answer
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Juvina Maggie answered.
2 years ago


IPO is all about raising money from the public and make them investors or shareholders in the company. This is a common question. As the name suggests, an IPO (Initial Public Offering) is the first offering of shares to general public. Prior to an IPO, shares might be offered to a different set of investors such as angel investors, venture capital firms and private equity players. Thus, this is the first time a company approaches folks like us for money. For example some of the IPOs like Reliance in 1977 and Infosys in 1995 were iconic issues. What exactly is the purpose of an IPO and why are IPOs conducted? Companies need funds for their regular operations, expansion plans etc and IPOs allow them to raise loads of equity capital in a distributed manner. Unlike bank loans and other forms of debt, equity is interest free capital for companies.