Category: IPO

IPO the buzzword of the global financial markets isn’t a young concept. The Dutch East India Company, for the first time in world history, floated its shares to the public in 1602 through the prominent Amsterdam Stock Exchange. That IPO enabled the company to raise a whopping 6.5 million guilders. When a private company first sells its common shares to the public, this process is widely known as an initial public offering (IPO). IPO refers that a private company’s ownership is transforming to public ownership ultimately. IPOs facilitate private companies to raise necessary capital from the public to fund expansions as well as recurring business needs. IPOs are one of the most effective financing modes for private companies to enhance long-term finance. Not only private companies but also government enterprises go for IPOs to mobilize long-term finance. Share issuance through IPOs also says about the issuing companies about their valuation to an identical market. Moreover, IPOs give the issuing companies investors an excellent opportunity to exit due to the hyper liquidity feature of the capital markets. Through IPOs public investors get prime opportunity to hold ownership of the issuing companies. Public investors get potential financial returns in the form of dividends and capital growth. Investment bankers, stock exchanges, and other relevant financial institutions act as the role of intermediaries between issuing companies and general investors under the process of IPO.