Initial Public Offering (IPO)
An Initial Public Offering (IPO), also called a stock market launch, is a classification of a public offering wherein a company’s shares are sold to institutional investors or retailers. One or more banks underwrite an IPO, they also arrange the listing on one or more shares on the stock exchange. This process makes it possible for a privately-held company to be turned into a public company.
IPOs can be used to raise new equity capital for companies, to make money out of private shareholders investments, and to allow easy trading of existing holdings or future capital raising through its transformation to a publicly-traded entity.
Once an IPO had taken place, shares may be freely traded in the open market at what is known as the “Free Float”.