What are the ways in which an IPO can be initiated ??, How to carry out the IPO proceedings, this article talks about all the things which you want to know about meaning of IPO, its process, requirement for eligibility for an IPO, mechanisms through which an IPO can be initiated. Any entity in the world want to grow in terms they prefer to, but the main component of their growth would require capital without which the entity cannot grow. As there is modernisation in the markets, every entity needs to make some innovation in their respective sectors. Now you can scroll down below and check more details regarding "What are the ways in which an IPO can be initiated ??"
What are the ways in which an IPO can be initiated ??
What is meant by IPO ??An IPO means the initial public offering by any company in the stock market at which the company is already listed or is there in existence or will be entering the stock market through the IPO. Through the IPO, it refers to the situation at which the company is making its position in the market through which the company can get money and utilise for the purpose of the companies objectives.
Why any company makes an IPO ??The main reason behind the company making the IPO is that of the liquidity crunch among the companies. The liquidity among the companies is very less because of the money invested in the working capital and so they don’t have money to make it to the research team and do some innovation. Mainly the money raised through IPO are for some specialised purpose only and so they may get new shareholders in the company which may increase the confidence among the members.
Eligibility for IPO:
- Net worth of the company should be atleast 1 crore in last 3 years.
- There should be distributable profits in the last 3 years.
- Tangible assets should be atleast 3 crores in the period of 3 years.
- The issue price should not exceed the amount equivalent to 5 times the net worth which existed before this issue.
Mechanism for offering IPO:There are mainly 3 ways where and IPO can be initiated. They are :
- Book Buildings
- Fixed Price