Definition of IPO (Initial Public Offering)

In Indonesian, the IPO is referred to as the Initial Public Offering. Thus the IPO is the stock of a
company that was first released to be offered or sold to the public / public. Therefore companies
that conduct IPOs are often referred to as "GO PUBLIC".

The purpose of the IPO

Why does a company want to sell or sell its shares to the public / community? There are various
kinds of objectives for companies to do IPOs, including:

Get cheap funds. Companies can get funds from various sources such as issuing bonds, borrowing
money from banks. But both methods have obligations, namely paying interest. Whereas if the
company releases shares to get funds, the company is not burdened with interest.

The company's financial performance is better. By obtaining these cheap funds, companies can pay
off debts and improve their financial statements quickly.

Faster growth potential. Companies can use internal funds for expansion, for example to open
branches. But if you have cheap funds, expansion can be faster and in the long run the potential for
company growth can be greater.

Improve company image. Public companies will always be highlighted by the media. If it can be
managed properly, the media spotlight can be an indirect marketing tool for the company.

Increase overall company value. By going public, the value of the company has the opportunity to
increase in the future in line with the increase in its share price. If the company is perceived as
having good performance by investors, then the chances of rising stocks also increase.
Types of IPO Shares

There are several types of IPO shares offered on the stock market. Here are the various types:

# 1 Blue Chip Stock

Blue chip shares are shares issued by a company with a good reputation. The credibility of these
shares has also been recognized.

Usually these stocks are companies that become market leaders in their fields.

The definition of the IPO (Initial Public Offering) is 2 of my finances

The profits obtained by the company are also usually stable. Therefore, blue chip shareholders must
get dividends or profit sharing according to the agreement within a certain period.

# 2 Income Shares

Income shares mean the shareholders are entitled to get a dividend that is greater than the previous
year.

These companies usually always get an increase in profits or profits.

Then, the company will share the profits (dividends) regularly with shareholders.

# 3 Growth Shares

Usually the stock growth will be issued by a leading company and is the largest company in its field.

However, it could be that the shares are issued by companies that are not too large, even located in
the area.

The most important thing is that the company can get a profit or profit that increases significantly.

# 4 Speculative Stocks

Speculative shares are shares that do not promise profits at any time.

However, these shares can have the opportunity to generate large profits in the future.

# 5 Counter Cyclical Stocks

Counter cyclical shares are stocks that are not affected by the conditions of the world economy.
Even in times of economic crisis, these stocks can still generate large profits.

Therefore, usually counter cyclical stock prices will remain high even in times of global recession.

Profit and Loss of IPO Investment

Investing in IPO shares has its own advantages and risks.

The advantage, investment in IPO shares can be started at an affordable price. This stock investment
also allows you to get high profits.

However, of course, behind the opportunities, there are risks. But you can minimize the risk of
investment by studying in detail the company you will buy the shares.
IPO mechanism

Although the notion of an IPO is considered simple as a jointly owned stock, in the submission of the
IPO process it is necessary to go through several mechanisms, including:

Meeting with issuers (company owners or shares). Such meetings are usually called the Due
Diligence Meeting. The parties that must be present at this meeting include issuers (shareholders),
securities companies (underwriters), appraisers (appraisers of company assets), independent
auditors, and legal consultants.

Initial Public Offering

Conduct Public Expose and Roadshow

At this stage, the company must introduce the IPO of its shares by presenting predictions of the
company's future development and growth to prospective investors.

Book Building

Book building is a condition where investors start bidding at certain prices and shares. At this stage,
there could be oversubscription (more shares are ordered than shares offered) so that the stock
price becomes expensive, or even undersubscribe (the shares offered are more than the shares
ordered) so the price is cheap.

Pricing

After knowing the number of shares and the number of interested parties, the last step of the IPO
mechanism is to determine the price. Pricing is carried out by securities companies with the approval
of the issuer.

Advantages and Disadvantages of IPO Stock Investments

Investing your funds into a stock IPO can be a modern investment choice because of its various
advantages. The advantage of stock investment compared to conventional investment is the
opportunity to get high profits or even without limits. It is not impossible that you will encounter
risks, but the risk of investing in IPO shares can still be minimized.

Judging from the advantages, investing in IPO shares can begin with affordable capital. This is
because when the stock is released through an IPO, it could be that the stock price is currently
bullish so that you are quite benefited from this situation. You can also get a higher profit
considering your condition when buying IPO shares under.

Second, you can trade stock IPOs more easily and flexibly through online stock trading facilities.
Through the online stock trading platform or application, you will get convenience both in the
transaction process and trading time.
However, the minus side of IPO stock investment is that you cannot as much as want to buy shares.
This is because the broker has limited the number of sales of IPO shares to the number of interested
parties. Usually the share of shares with the buyer has been determined, so you could not miss it.

Second, you cannot buy IPO shares as soon as you buy shares on the Indonesia Stock Exchange. This
is because in an IPO, there is a span of a week before withdrawal (withdrawal of funds) so you need
to wait first.

Buying IPO shares is like having a company. As an owner, you certainly expect profits from what you
invest. Losses are certainly not something that is expected for a company owner. Therefore, keep
doing a thorough analysis of the company that you are aiming for. So how? Are you interested in
investing in IPO shares?