What Is an IPO? How to Apply for an IPO?

The term I P O means Initial Public Offering. Every company has their shares listed in stock markets. But ever wondered from where these shares come? They can’t be present in the share market for eternity. There was a first time when these stocks were issued. These first issue of shares and their first lot is termed as Initial Public Offering.

At first the companies have to take necessary approvals from the government and the particular stock exchanges for an issue. After studying the various factors these agencies give a go ahead. Then the board of directors of the companies sit and formulate a strategy to fix a price. After going through the public standing of the company, a price is fixed. Then advertisements are given in newspapers informing the public about the issue of the I P O. Then the public starts applying for their shares. In the last stage, a particular date is fixed and the share starts trading in the selected exchanges and hence they are listed. The major reason behind the issue is the need for capital. Every company needs capital for expansion. In this manner, a company raises the requisite capital from public as well as institutional investors for their expansion and growth.

How to apply for I P O? Investors apply through A S B A or Application Supported by Blocked Amounts.

What is A S B A? In this process, the applicant can apply through banks designated by S E B I. In this process the money is not debited from the bank account of the person until the shares are actually given to him. Hence this is the basic information about Initial Public Offering.

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