Initial Public Offering (IPO)

An IPO is when a Private Company converts to a Public Company following the listing of its Shares on the Stock Exchange. A Listed Company will be analysed and will be able to raise capital in the future.

An IPO is a major step for a Private Company, converting it to a Public Company listing of its Shares on the Stock Exchange. When a Company becomes a Public Company, it opens up to greater public scrutiny as it has the Investment Community and the Media gathering information on its operations and placing a valuation on its Shares. The main motivation for a Company to go through an IPO is the ability to access new sources of capital via the Equity Capital Markets. The owners can release some of their wealth previously tied up in the company, thus providing them with liquidity. In the past an IPO was a young Company with a thirst for capital, listing on the Exchange. Now there is the invention of the Unicorns, which are IPOs for over $1 billion.