How does Initial Public Offering (IPO) Work?
In addition to preparing for an exponential increase in public scrutiny, a private firm seeking an IPO must also submit a massive amount of paperwork and financial reports. All these preparation is to satisfy the standards of the Securities and Exchange Board of India (SEBI), which regulates public companies. Because of this, a private company that intends to go public employs an underwriter—typically an investment bank—to provide advice on the IPO and aid in the determination of the offering’s starting price. A roadshow is a meeting with potential investors that is scheduled by underwriters to help management get ready for an IPO. In order to guarantee wide distribution of the new IPO shares, the underwriter assembles a syndicate of investment banking companies. A portion of the shares will be distributed by each investment banking group in the syndicate. When a business’s stock starts trading on a public stock market, such as the National Stock Exchange (NSE) or Bombay Stock Exchange(BSE), the underwriter issues shares to investors and the firm and its advisors agree on an initial price for the initial public offering.
What is an IPO and How it Works
Stocks of publicly traded firms are traded on the stock market, and one way for a company to go public and have its stock listed on a stock exchange is through an initial public offering (IPO). Following an initial public offering, the company’s equity joins the general stock market and is subject to the same dynamics of supply and demand as other publicly traded equities.