Part 5- The IPO
The Initial Public Offering (IPO) is an event that signals the official introduction of a venture onto the share market. When a business – or other entity – decides to “go public” by listing their organization on a recognized exchange, an IPO is required. This process involves the offering of shares to investors, allowing these backers to become partial owners in the company.
Let’s come back to our example:
Five years after the initial PE investment, the company has achieved great success. They have expanded their product range and are now present in major cities all over the country. Revenues and profits remain solid, and the investors are happy. The promoter, nevertheless, has no intention of stopping here and is determined to move forward with their plans.
The promoter has set their goals on global expansion! They want the brand to be accessible in all major international cities, establishing a minimum of two outlets in major cities across the globe.
The company requires an estimated CAPEX of 3500 Crs in order to conduct market research, hire personnel, and expand manufacturing capabilities. Additionally, they need to acquire real estate internationally. To finance these expenses, the management has multiple options available.
Relying on internal accruals to finance capital expenditures is an effective option. This way, fundraising can be avoided, and money available within the organization can be utilized.
Taking into account all of the above, it makes sense to pursue a combination of these elements.
Assuming the company decides to finance part of its CAPEX through internal accruals and the other portion via an IPO, it would have to offer its shares to the public. Investors, i.e. the general public now can then choose whether or not they want to invest, by paying a particular price. This type of offer is known as an ‘Initial Public Offer’.
We find ourselves at a critical point where several questions must be addressed.
In the next chapter, we will answer the above questions and provide more insights into the IPO Market. Through this chapter, we hope you have gained an understanding of the steps typically taken in order to pursue a public offering.
*All subscription pricing plans mentioned across the website are exclusive of 18% GST
By signing up, you agree to receive transactional messages on WhatsApp. You may also receive a call from a BP Wealth representative to help you with the account opening process
Disclosures and Disclaimer: Investment in securities markets are subject to market risks; please read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Past performance is not indicative of future results. Details provided in the above newsletter are for educational purposes and should not be construed as investment advice by BP Equities Pvt. Ltd. Investors should consult their investment advisor before making any investment decision. BP Equities Pvt Ltd – SEBI Regn No: INZ000176539 (BSE/NSE), IN-DP-CDSL-183-2002 (CDSL), INH000000974 (Research Analyst), CIN: U45200MH1994PTC081564. Please ensure you carefully read the Risk Disclosure Document as prescribed by SEBI | ICF
Attention Investors
Issued in the interest of Investors
Communications: When You use the Website or send emails or other data, information or communication to us, You agree and understand that You are communicating with Us through electronic records and You consent to receive communications via electronic records from Us periodically and as and when required. We may communicate with you by email or by such other mode of communication, electronic or otherwise.
Investor Alert:
BP Equities Pvt Ltd – SEBI Regn No: INZ000176539 (BSE/NSE), INZ000030431 (MCX/NCDEX), IN-DP-CDSL-183-2002 (CDSL),
INH000000974 (Research Analyst) CIN: U45200MH1994PTC081564
BP Comtrade Pvt Ltd – SEBI Regn No: INZ000030431 CIN: U45200MH1994PTC081564
For complaints, send email on investor@bpwealth.com
You’ll be directed to your subscription plan
