What Does Initial Public Offering?

What Does Initial Public Offering – IPO Mean?

Back to basic. We are getting a few questions on these nowadays. And we suppose bdipo should eventually contain most, if not the entire information about IPO, and IPO in Bangladesh. So, here it goes —

IPO is 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.

Also referred to as a “public offering”.

Is IPO a risky business?

Theoretically, yes. For the individual investor, it is tough to predict what the stock will do on its initial day of trading and in the near future because there is often little historical data with which to analyze the company. Also, most IPOs are of companies going through a transitory growth period, which are subject to additional uncertainty regarding their future values.

Well, statistically, in Bangladeshi market – not so much.