What is IPO Listing? (In English)Ep:-03 || Breakdown IPO fundraising Process ||

Summary

In this video, Raj from Investor Dude explains the process of an Initial Public Offering (IPO) and why companies go public. When a company lacks sufficient funds to expand, it can either take a loan or offer shares to the public, turning individuals into shareholders. The IPO process includes hiring an investment banker, regulatory procedures, pricing shares, offering them to the public, and eventually trading on stock exchanges. Raj also discusses how companies can use funds raised through IPOs to grow and share profits with shareholders. Subscribe to learn more about stock markets and finance.

Takeaways

• 😀 Companies focus on profit generation, and to earn profits, they need to expand their businesses or develop new products for customers.
• 😀 When a company lacks enough funds for expansion, it can either take out a loan or offer shares to the public via an Initial Public Offering (IPO).
• 😀 Offering shares through an IPO allows companies to raise funds without the burden of repaying loans or interest, making the public shareholders of the company.
• 😀 The IPO process involves several key steps, starting with the company hiring an investment banker based on their track record and reputation.
• 😀 The investment banker helps the company navigate regulatory procedures and paperwork required by regulatory bodies like SEBI (Securities and Exchange Board of India).
• 😀 Once legal procedures are complete, the company and its investment banker determine the valuation of the company and set a price band for the shares offered to the public.
• 😀 The IPO is launched, and people can buy shares at the fixed price range determined by the company and investment banker.
• 😀 After the IPO, the company's shares are listed on stock exchanges like the NSE (National Stock Exchange) or BSE (Bombay Stock Exchange) for public trading.
• 😀 The funds raised through the IPO help the company expand its business operations, which could result in profits being shared with shareholders through dividends.
• 😀 The video invites viewers to explore more about stock market investing and finance by subscribing to the 'Investor Dude' YouTube channel for further insights on SEBI and other topics.
• 😀 The next video will focus on SEBI’s role, rules, and power in the stock market, and viewers are encouraged not to miss it.

Q & A

Why do companies aim to earn profits?

Companies aim to earn profits because profits enable them to expand their businesses, develop new products, and reinvest into their operations. Profits are essential for sustaining and growing a company.

How do companies expand when they lack sufficient funds?

When companies do not have enough funds to expand, they have two main options: they can either take a loan from a bank or offer their shares to the public through an Initial Public Offering (IPO).

What is an IPO?

An IPO, or Initial Public Offering, is when a company offers its shares to the public for the first time, allowing them to raise capital from external investors without taking on debt.

What are the benefits of a company listing its shares on the stock market?

By listing its shares, a company can raise the capital needed to expand without the burden of repaying a loan. Investors become shareholders and may benefit from potential dividends, while the company gains access to funds for growth.

What is the role of an investment banker in the IPO process?

An investment banker helps a company prepare for its IPO by handling the paperwork, legal procedures, and providing advice on share pricing. They also manage the relationship with regulatory authorities like SEBI.

What is SEBI and why is it important in the IPO process?

SEBI (Securities and Exchange Board of India) is the regulatory authority that oversees the securities market in India. It ensures that all legal procedures, disclosures, and compliance requirements are met during the IPO process.

What happens during the share pricing step of the IPO process?

During the share pricing step, the company and its investment bankers decide the valuation of the company and determine a price band for the shares. This helps set a fair price range for the public to purchase shares.

How does the IPO listing process work after share pricing is decided?

After share pricing is finalized, the company launches the IPO, where the public can buy shares at the fixed price range. Once the IPO is complete, the shares are listed on stock exchanges like NSE and BSE, making them available for trading.

What happens once a company is listed on the stock exchange?

After a company is listed on the stock exchange, its shares become available for trading. The company receives the funds raised from the IPO, which can be used for business expansion or other purposes. Shareholders can buy or sell shares in the market.

How do shareholders benefit from owning shares in a company after its IPO?

Shareholders benefit by owning a portion of the company and may receive dividends if the company earns profits. Additionally, shareholders can potentially profit from selling their shares if the company’s stock price increases over time.