What is the full form of IPO
IPO: Initial Public Offering
IPO stands for Initial Public Offering. It is a process by which a private company can go public. In IPO the company offers to sell its first stock to the public. Most often, the new or small companies offer IPO. At times, it could be an old company which decides to go public to be listed on the stock exchange of the country.
IPO is usually offered by companies to generate the capital to expand its business.
The capital raised through IPO can be used to fund research, development, marketing programs and to pay off the debts.
A company which goes public by offering its stock is not obliged to repay the capital to investors. The company who offers to sell its stock is known as an ‘issuer’ and it needs to hire an investment bank to offer IPO. After the IPO, its shares are traded in the open market which means the shares can be sold by investors through secondary market trading. Only after a company offers its stock for sale through IPO, the public can invest in it. You may contact the owner of private company for investing in his company, but he is not obliged to sell you anything.