IPO

IPO

TOPIC: Economy

Context- The mega initial public offering (IPO) of Life Insurance Corporation (LIC) is coming when markets are volatile and foreign portfolio investors (FPIs) are pulling out from Indian stocks in the wake of the US Fed tightening rates.

Concept-

Who can apply?

• A portion of shares, not exceeding 5 percent of the offer, will be reserved for employees.
• Another portion not exceeding 10 per cent, will be reserved for eligible policyholders.
• A minimum 35 percent of the issue will be reserved for retail investors.

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 the secondary market where existing securities are bought and sold. It is also known as the stock market or stock exchange.
• It is generally used by new and medium-sized firms that are looking for funds to grow and expand their business.
• 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.