IPO Full Form | Full Form of IPO

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Initial Public Offering

IPO stands for Initial Public Offering.
It's a process by which a private company can go public. In IPO the company offers to sell its first stock to the public.
Most frequently, the new or small companies offer IPO.
At times, it might be an old company which decides to go public to be listed on the stock market of the country.
IPO is typically offered by companies to get the capital to expand its business.
The capital raised through IPO are often used to fund research, development, marketing programs and to pay off the debts.
A company which matches public by offering its stock isn't obliged to repay the capital to investors.
The company who offers to sell its stock is understood as an 'issuer' and it must hire an investment bank to offer IPO.
After the IPO, its shares are traded within the open market which means the shares are sold by investors through secondary market trading.
Only after a corporation offers its stock available through IPO, the general public can invest in it.
You'll contact the owner of private company for investing in his company, but he's not obliged to sell you anything.

Eligibility Criteria to use for an IPO

The company must have 400 or more shareholders who are holding 100 or more shares.
There should be 1.10 million publically traded stocks.
Share price at the time of listing should be a minimum of $4 per share.
The market price of shares should be a minimum of 40 million.
Aggregate profit before tax earnings of the last three should be $ 10 million, out of which the last two years pre-tax earnings shouldn't be but $ 2 million, and there shouldn't be lost in any of the last three years.
Market capitalization must be a minimum of $ 550 million.
Previous year revenue must be a minimum of $ 100 million.

It helps in raising the fund because a large no. of the general public will invest within the company by buying shares.
It increases the corporate reputation, brand reputations, and market opportunity because more people will realize it.
It helps in getting the loan with lesser interest costs.
It increases the liquidity because any time shareholders can sell their shares, management/promoters also can easily sell their shares.
It attracts employees also, and that they also will get motivated.