What is an Initial Public Offering (IPO)
An Initial Public Offering (IPO) is the process through which a private company offers its shares to the public for the first time, allowing investors to buy ownership in the company. This event transforms the business from privately held to publicly traded on a stock exchange.
Companies pursue IPOs to raise capital for expansion, pay off debt or fund new projects. The process involves regulatory approval, valuation and underwriting by investment banks. An IPO increases transparency and liquidity but also subjects the company to public scrutiny, reporting requirements and market fluctuations that can influence its value and operations.
For investors, IPOs offer the opportunity to invest early in a company’s public journey, potentially benefiting from future growth and stock appreciation. They also provide access to new sectors or innovative businesses that were previously unavailable to public investors.