Initial public offering

An initial public offering (IPO) or stock market launch is a type of public

offering where shares of stock in a company are sold to the general public, on a securities exchange, for the first time. Through this process, a private

company transforms into a public company. Initial public offerings are used by companies to raise expansion capital, to possibly monetize the investments of early private investors, and to become publicly traded enterprises. A company selling shares is never required to repay the capital to its public investors. After the IPO, when shares trade freely in the open market, money passes between public investors. Although an IPO offers many advantages, there are also significant disadvantages. Chief among these are the costs associated with the process, and the requirement to disclose certain information that could prove helpful to competitors, or create difficulties with vendors. Details of the proposed offering are disclosed to potential purchasers in the form of a lengthy document known as a prospectus. Most companies undertaking an IPO do so with the assistance of an investment banking firm acting in the capacity of an underwriter. Underwriters provide a valuable service, which includes help with correctly assessing the value of shares (share price), and establishing a public market for shares (initial sale). Alternative methods such as the dutch auction have also been explored. In terms of size and public participation, the most notable example of this method is the Google IPO.[1] China has recently emerged as a major IPO market, with several of the largest IPOs taking place in that country. Or The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded.

In an IPO, the issuer obtains the assistance of an underwriting firm, which

helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market.

Q)Why a bank issue IPO?

A bank IPO occurs when a bank offers its stock for sale to the public for the first time. Typically, the sale of stock occurs when the bank goes from a privately held financial institution to a publicly held institution. Generally, a bank issues stock in a bank IPO as a new source of income. Since banks use the money that people deposit into the bank accounts as the money the bank lends, it is important to have a sufficient amount of money on hand. In addition, banks are required to keep a minimum amount of money in reserve. Issuing a bank IPO can help banks meet these minimum requirements. When a bank issues an initial public offering of its stock, it is a risky move for the bank to take. First, it is a risk because each stock represents ownership of the bank. Shareholders of the bank stock then have a say in the way that the bank is run and the decisions that the bank officials make, as long as it is in accordance to banking regulations and laws.