Initial Public Offer (IPO)

Answer: An Initial Public Offer (IPO) is the first offer of securities made by an unlisted company to the public for subscription.

Through an IPO a company offers its shares (fresh issue and/or offer for sale by existing holders) to the general public for the first time, by issuing a prospectus (Red Herring Prospectus) approved as per SEBI guidelines. After the IPO the shares are listed on recognised stock exchanges and become freely tradable. An IPO helps the company raise large capital, widen its ownership and gain public image. It may be made through fixed price or book building method.