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What is an IPO? 

The full form of IPO is Initial Public Offering. When a company issues its common stock or shares to the public for the first time, it is called an IPO. IPO is issued by limited companies so that it can be listed in the stock market. After being listed in the stock market, the company's shares can be purchased in the stock market. The company issues an IPO to collect funding in case of investment or expansion. When a company issues its common stock or shares to the public for the first time in an IPO, it is called an IPO. The two main reasons for a firm to launch an IPO are to raise capital and to enrich the previous investors! 

Meaning of IPO for a company

After any company applies for an IPO, direct and indirect results come out, which are as follows: Through IPO, any company can increase its capital and use it for various needs. Companies which have less funds and small budget, can improve it through an IPO and the company's image or brand image can also be improved. People's trust in the company increases. The image of the company's management emerges and it has a name in the industry. Along with this, the following changes come in relation to some facts and information of the company: The company's balance statement and balance sheet become public. The company has to be listed as per the rules laid down by SEBI…

Meaning of IPO for investors 

Through IPO, traders and investors can expect to earn good profits from the stock market. An intraday trader hopes to earn quick profits through IPO and an investor takes it as a long-term investment. So if you are an investor who is thinking of keeping his money invested for a long time, then you should get complete information related to IPO and understand everything about the company. At present, the Indian stock market is touching new heights. If you are thinking about investing, then it is very important to know how and in which area you are going to invest your hard earned money. Types of IPO.

There are two types of IPOs:— 

 1. Fixed Price IPO 

 2. Book Building IPO 

Fixed Price IPO Fixed price IPO can be referred to as the issue price that some companies set for the initial sale of their shares. Investors get to know about the price of the shares that the company decides to make public. The demand for shares in the market can be ascertained after the issue is closed. If investors participate in this IPO, they have to ensure that they pay the full price of the shares while applying.

Book Building IPO

In the case of book building, the company launching the IPO offers investors a 20% price band on the shares. Interested investors bid on the shares before the final price is decided. Here investors need to specify the number of shares they want to buy and the amount they are willing to pay per share. The lowest share price is known as the floor price and the highest stock price is known as the cap price. The final decision regarding the price of the shares is determined by the bids of the investors!

Purpose of bringing IPO 

When a company needs money, the company has two ways – either it takes a loan from the bank or it raises funds from the public. Now, when a company wants to raise capital from the public in equity, it gets listed on the stock market and issues its common stock to the public for the first time. This process is called Initial Public Offerings (IPO). 

Use of IPO funds

The funds raised through IPO are usually used for the following reasons. 

 1. Expansion of the company 

 2. Technological development,

 3. Buying new assets, 

 4. Eliminating debt etc. 

 As soon as an IPO is launched or proposed in the economic world, the shares of the company become available to various investors and traders. These shares can be bought and sold from the secondary market.