What is an IPO (Initial Public Offering)?

An Initial Public Offering (IPO) is the process through which a private company offers its shares to the public for the first time, becoming a publicly traded company. The primary objective of an IPO is to raise capital for business expansion, debt repayment, or other corporate needs. Before launching an IPO, the company must comply with regulatory requirements, including submitting a draft prospectus to SEBI for review. The prospectus contains details about the company’s business, financial performance, risks, and use of funds. Once approved, shares are offered to institutional and retail investors through a price band or fixed price. After listing on a stock exchange, the shares can be traded freely in the open market, providing liquidity to investors and visibility to the company.