When a company issues its common stock or shares to the public for the first time, it is called an IPO, initial public offering. These IPOs are issued by limited companies so that they can be listed on the stock market. After being listed on the stock market, the company’s shares will be able to be bought in the stock market.
Role of SEBI
SEBI (Securities and Exchange Board of India) is a government regulator for IPO companies. It makes the IPO companies strictly follow the rules. The company is obliged to give all kinds of information to SEBI. It is a mandatory condition that the company will give all its information to SEBI. Not only this, SEBI also conducts an investigation of the company after the IPO, whether the information given by it is correct or not.
Investing in an IPO
Although an IPO is considered a risky investment, because it does not have any data or information regarding the progress of the company’s shares, yet for the person who invests in the stock market for the first time. An IPO is a better option. If you want to make a fortune in the stock market then you must know about the IPO.
Benefits from IPO
The capital invested by the investor side of the IPO goes directly to the company. However, in case of disinvestment, the capital received from the IPO goes directly to the government. Once allowed to trade their shares, then they can be bought and sold, yes one thing must be remembered that the investor will be responsible for the profit and loss of buying and selling the shares.
How to invest in an IPO
Whenever you choose a company to buy an IPO, your broker should be the best first. Try to choose the company together with the broker. Compare three to four other companies with the companies you are choosing. Invest only after watching the progress of all these companies for a few days. The opinion of the rating agency also matters a lot. See also the price of the company’s IPO, see the credibility of the company’s promoter in the market and keep getting information about the company’s IPO from other investors.
Many times people do not have complete information about the IPO, due to which they often suffer big losses. Always be cautious, many times old investors sell their shares through IPOs, and in some cases offer new shares in addition to old investors’ shares. The IPO investor should know the reasons for selling the shares of the old investors. If you want this business to grow well and benefit you always, then you must pay attention to every little thing before proceeding in this field.