INITIAL PUBLIC OFFERING

INITIAL PUBLIC OFFERING

Subject : Economics

Context : Recently, five companies filed their draft red herring prospectus (DRHP) for an initial public offering (IPO) with the Securities and Exchange Board of India (SEBI). In 2020-21, as many as 69 companies raised close to Rs 75,000 crore through public issues, including IPOs.

Concept :

Initial Public Offering

• IPO is the selling of securities to the public in the primary market.
• Primary market deals with new securities being issued for the first time. It is also known as the new issues market.
• It is different from secondary market where existing securities are bought and sold. It is also known as the stock market or stock exchange.
• It is when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public.
• Unlisted companies are companies that are not listed on the stock exchange.
• It is generally used by new and medium-sized firms that are looking for funds to grow and expand their business.