What is an IPO?
We are starting with a new series of posts that would resolve your queries and doubts about IPO. Starting from now, until March 2010, we would post one post each day and build an IPO knowledge base here so you can refer to one link and understand what’s it’s all about.
So What is an IPO?
An IPO is defined as an exercise 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. The exercise refers the issue of shares to the public by the promoters of the company. The shares are made available to the investors at the face value of the share or with a premium as per the perceived market value of the share by the promoters. The IPO can be in the form of a fixed price portion or in the form of a book building portion. The IPO paves way for listing and trading of the issuer’s securities.
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Book Building and Fixed Price Issue are the two types of Initial Public Offerings (IPOs) through which a public company can raise money in the capital market.
In a book building public issue the bids are received at different price levels and the demand for the issue is built up over a period of time. Depending upon the bids received at different price levels the issue price is ascertained. In a fixed price issue the issue price is pre ascertained by the issuer.
Types of IPO http://www.motilaloswal.com/MOSL/IPO/
There are two types of IPOs
“Book Building” means a process undertaken by which a demand for the securities proposed to be issued by a body corporate is elicit and built up and the price of the security is assessed on the basis of the bids obtained for the quantum of securities offered for subscription by the issuer. This method provides an opportunity to the market to discover the price for securities.
In case of a fixed price issue the issue price is fixed.
ONLINE IPO
MOSL facilitates the IPO application for all of its clients through online platform. Using the Online IPO service, an existing can apply for the IPO using the weblink http://www.onlinetrade.motilaloswal.com