Purpose of IPO
The main and core purpose of an initial public offering (IPO) is to raise capital and funding by offering shares of the company to the public for the first time. It is important for companies to list on an exchange. However, IPOs provide liquidity to existing shareholders, improve the company's visibility and credibility, and serve as a means to access a broader investor base. By public offering, companies can expand funds for research and acquisitions, while shareholders can monetise their investments. The process also allows companies to attract talented employees through equity-based incentives. In a nutshell, IPOs play a crucial role in the overall growth of the organisation, diversification of services and products, and strategic development for companies in the public markets.
Who is it for?
An Initial Public Offering (IPO) primarily targets two key groups: companies and investors. For companies, particularly private ones, seeking to expand, raise capital, increase visibility, or provide liquidity for existing shareholders, an IPO represents an important financial event. It offers a crucial way to convert from private to public ownership, enabling access to public markets and potential investors. The investors, both individual and institutional, are the primary beneficiaries of IPOs, presenting them with an opportunity to invest in newly listed companies. This enables investors to achieve potentially significant returns by participating in the growth trajectory of these companies from an early stage of their public life.