INITIAL PUBLIC OFFERING (IPOs)

IPOs are the stock which company want to sell to the public for the first time.Each and every information related to IPOs are available in the prospectus i.e. a document that each and every firm needs to furnish to each investor.

There are two types of public issues:

The general cash offer (GCO)
the right offer (RO)

As per the GCO the equity issue is sold to interested investors only and RO is a offer that gives current shareholders an opportunity to maintain their current share in the company before the final shares are made public. The securities that are classified in two groups ,known as seasoned and unseasoned. Seasoned securities are those that are more of a type already in the market and unseasoned are those that are offered for the first time.

Why are firm needs to issue IPOs? and answer to this is that when a company lack funds or wants to raise additional capital. A company has many options to raise funds, one them is IPOs and other is to take a debt, but most of the firms are willing to issue IPOs over debt because debt need to paid back with an interest over it where as IPOs do not .

The after market performance of an IPOs tells how the stock price behaves after the day of its borrowing on the secondary market.

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