What Is An IPO ?
An IPO is an Initial Pubic Offering. In effect, an IPO takes a private company public.
It is also a means for an existing company listed on one of the exchanges to spin off or create a new company from its parent company.
Reasons For Floating An IPO
The most obvious reason for a private company to enter the public market is raising immediate liquid assets by way of offering shares in the company.
A company may need to generate money to drive it's expansion plans and combat competitition.
There have been some bad apples in the IPO offerings in the Indian Stock Market history.
Generally, companies start floating Initial Public Offerings (IPO) when the stock markets are at a high and the public appetite for shares of companies
are also at a high.
However, precautions need to be taken in such situations as the general public is most vulnerable in these times.
It is at these times that the stock market regulators like the Securities Exchange Board Of India (SEBI)
should take care of the investors through appropriate investor awareness programs.
Corporate India needs to take note of such unwanted spikes in IPOs and protect investors from the pitfalls.
The IPO, however still remains the prefered vehicle for new investors to get into the stock markets and it can prove to be beneficial
only if investors pick the right Initial Public Offerings (IPOs) to participate and make a decent return on their investments.
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