IPO stands for Initial Public Offering. It is a process where a company decides to raise funds from the public by selling its shares.
The shares are first issued in the primary market via IPO and then moved to the secondary market, where it is traded among the public. The secondary market is also known as the After Issue Market.
FPO in the share market is the process by which a publicly listed company dilutes its shares or issues new shares to the investors. A company opts for FPO when it wants to raise capital by offering more shares to the public after IPO.
Here’s how the IPO Works: The IPO process kicks off with appointing a merchant banker, getting approval from the SEBI to get listed on the stock market. The whole IPO process is regulated by the Securities and Exchange Board of India (SEBI).
Let’s find out step-by-step process a company follows to get listed on the stock market:
Firstly the company will appoint a merchant banker who helps in all the following steps.
Then, the company has to get an initial nod from the SEBI.
Next, the company prepares a Draft Red Herring Prospectus (DRHP) and submits it to SEBI. DRHP is a document that contains all the information about the company like:
Financial Statements
Number of shares offered to the public
Objective of the IPO, etc.
Later, the company fixes the price band and the marketing of the IPO is done at least 2 days before the bidding process starts.
Finally, stockbrokers like Alice Blue start accepting bids from the public.
Once the bidding is complete, shares are allotted to the public. Then, the stock will be listed on the stock market.
The articles curated around IPO, FPO and the difference between them are listed below:
What Is The Full Form Of IPO? - Initial Public Offering
IPO refers to the process where a private company offers its shares to the public for the first time and marks its transition to becoming a public company.