Those just starting out learning about the stock market might have heard of the term “IPO”, but may not know what it means or what it stands for.

To know more, let’s understand the 5W1H (what, why, where, who, when, and how) of an IPO.

So, what exactly is an IPO?

IPO is an acronym for “initial public offering”. As the term suggests, an initial public offering is a process whereby a private company is offering its shares to the public for the first time. The once-private company then becomes a public-listed company. 

Why do companies go public, you may ask.

Companies would want to go public for various reasons.

The main reason is usually to raise funds from the public to fund its growth, both by reinvesting into its own business (organic growth) or by buying other companies (inorganic growth).