An IPO (Initial Public Offering) is the process by which a private company offers its shares to the public for the first time and becomes a publicly listed company.
🔍 Simple Definition
An IPO is when a company sells its shares to the public for the first time to raise money.
🏢 How Does an IPO Work?
- A company decides to raise funds
- It offers shares to the public through an IPO
- Investors apply for shares
- Shares get listed on stock exchanges like:
- National Stock Exchange (NSE)
- Bombay Stock Exchange (BSE)
- After listing, shares are freely traded in the market
🧠 Example
When Zomato launched its IPO in 2021, it allowed the public to invest in the company for the first time.
💡 Why Do Companies Launch IPOs?
- Raise money for expansion
- Pay off debts
- Increase brand visibility
- Allow early investors to exit
👥 Why Do Investors Invest in IPOs?
- Opportunity to invest early in a growing company
- Chance to earn profits after listing
- Long-term wealth creation
⚠️ Risks of IPO
- Share price may fall after listing
- Company performance may not meet expectations
- Market conditions can affect returns
📊 Types of IPO
- Fixed Price IPO – Price is decided in advance
- Book Building IPO – Price is decided based on demand
An IPO is the entry point of a company into the stock market, offering investors a chance to become shareholders from the beginning of its public journey.