What is ipo in share market ? Types of IPO in share market ? This question is asked almost by all the newbies who are entering stock market for the the first time. In this article we have discussed it.
Initial public offering (IPO) is the process of turning the shares of private company into public, for the first time. The company decides to raise funds by selling the shares of the company to the public. After IPO, the company which is private till now turns public. Therefore the process of ipo is sometimes also called “going public”. After an IPO, the company gets listed on the stock market and becomes publicly traded company. And the shares of this company can be traded on market and you can earn money trading from these stocks like the other listed companies.
IPO’s are generally used by small companies, startups, new companies etc. for expanding their businees, paying off their debt, reseasch, marketing, etc.
Generally there are two types of IPO’s, they are:
Fixed price offering:
In fixed price offering the price of the stocks of the company are evaluated by the company itself and the prices are fixed.
Book building offering:
In book building issue the prices are not fixed but a price band is provided to the investors with a price band of upper price range and lower price range.
Advantages of IPO’s :
some of the major advantages are that it helps new companies, startups, etc. to raise funds, from the public investors without going through the venture capitalists. This helps in making deals easier, and also increases the transparency, prestige and better social image.
Dis-advantages of IPO’s:
The companies have to disclose all financial data and other information to the public. The IPO’s are expensive, and increases management costs, etc. The companies also need to disclose businees methods and some other secrets.

Returns of IPO’s in the past:
Before investing make sure you do your own research. Whatever companies IPO you might be going to apply, you are advised to go through the Red herring prospectus of the company. This document will let you know about the company’s profile, target market, team, financials, previous quarterly results, how much shares are being issued and all other details.
In this article we discussed What is ipo in share market ? Types of IPO in share market
What is Book building offering?
In book building issue the prices are not fixed but a price band is provided to the investors with a price band of upper price range and lower price range.
What is fixed price offering?
In fixed price offering the price of the stocks of the company are evaluated by the company itself and the prices are fixed