Thinking of Investing In IPOs? Read This First!

Interested in making money? Good. Want to start with shares? Excellent. Thinking of IPOs? That’s what we’re talking about!

With the number of Initial Public Offerings in 2017, these are exciting times for Indian businesses and investors alike. While investing in them is an excellent financial move, you should know the ins and outs before you do so.

by Saloni Menon
by Saloni Menon

*Image Source Google

Here are IPO basics you should know about.

• What is it?

It stands for Initial Public Offering. Companies get themselves listed on the markets and offer shares to the public for the very first time. Once listed, a company that was private becomes public.

• Why does it go public?

There are various reasons for a company to offer an IPO. It could be looking to raise fresh capital, increase its value in the industry, repay debts, or expand.

• How to buy these shares?

There are two ways to pick up these shares:

1. If a company is already listed, you can buy the shares by trading in the markets. This is called buying from the secondary markets.

2. If this is a fresh IPO, you buy it directly from the company and is termed as buying from the primary market. New shares are sold at a cheaper price compared to buying it from the secondary market.

by Saloni Menon
by Saloni Menon

*Image Source Google

• Things to look out for?

Every investment has its share of aspects to look out for. With IPOs, it is:

1. Oversubscription: If demand for shares is more than the ones available, you may not get the number you desire.

2. Company Background: If the said company is drowning in controversies or has too many debts, avoid.

3. Peer performance: Take a look at the company’s competition in the industry. Their performance will give an indication of whether you should invest or not.

In the end, know this. You read up on the company, research a lot using the internet and talking to financial advisors, and post that based on your satisfaction, you invest.