Every now and then, a new company debuts on the stock exchange.
These new listings are known as “initial public offerings” or IPOs.
Companies choose to list on the stock market to raise funds for business expansion and other operational needs.
IPOs offer a route for businesses to raise capital from the general public, rather than borrowing it from banks or financial institutions.
According to stock exchange listing rules, every company going for an IPO needs to issue a chunky document called a prospectus.
The prospectus will provide details of the company’s business, its strengths, risks as well as industry characteristics.
The document will also detail the amount of money to be raised and how such monies will be utilised post-IPO.
For investors, IPOs can be exciting affairs as they allow them to gain exposure to new types of businesses or new business models.
So, should you invest in IPOs?...