How New launch IPO hits the market Industry
By Rajan Chaurasiya December, 28 2024 13:06 PMMoney makes money is an old saying. Companies need money to grow. And to grow, companies need constant liquidity. One simple way to do that is to raise funds from the market through an Initial Public Offering. Borrowing from the market and the general public often becomes an obvious choice for a growing company that has already used a lot of private capital to expand its business. To borrow the money it needs from the public, a company has to put itself on the stock market. An initial public offering or New launch IPO is a way to list a company on the stock exchanges.
This process gives companies legal permission to borrow capital from the public.Once any company makes its public offer or new launch ipo and gets listed on the stock exchanges, it becomes a public company as declared by law. Before this process it remained a private company. This means that where earlier the shares of the company were held privately, now after the launch of the IPO those shares are with the public. In other words, New launch ipo is the process by which a private company becomes public by selling its shares to the general public. According to the Securities and Exchange Board of India (SEBI), “When an unlisted company either brings a new issue of shares or convertible securities or offers its existing shares or securities to the public for sale for the first time, it is called an IPO.
- The Initial Public Offering (New launch IPO) market in India has reached unprecedented heights in 2024, and this trend is expected to continue in 2025 as well. And 2024 is also projected to break records. In the year 2024, more than ₹1.6 lakh crore of capital was raised through 92 main board IPOs, surpassing the previous record of ₹1.19 lakh crore in 2021.
- In 2025, the figure of capital raising through IPO is estimated to cross ₹ 2 lakh crore, which will be a new milestone for the Indian capital market which will bring economic benefits to the companies as well as the country.
- When a private company becomes profitable and plans to expand itself, the company needs more capital to meet its new plans. At this juncture it becomes necessary for the company to go public to raise equity capital. Companies apply for a New launch IPO broadly for the following reasons. By getting publicly listed they are able to raise funds from the general public by creating a road map for investors.
1- IPO launch enables and facilitates mergers and acquisitions.
2- IPO launch helps them gain visibility.
3- IPO is also an exit opportunity for the early investors of the company.
- To be listed on the two major stock exchanges of India, the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE), a company must have a minimum paid-up capital of Rs 10 crore. The post-issue market capitalisation of the company should also not be less than Rs 25 crore.
New launch IPO related terms
Price band refers to the floor level for which shares of a company can be bid for by investors for the first time. As per SEBI regulations, the difference between the floor of the price band and its cap should not be more than 20%.
The merchant banker performs due diligence to prepare the offer document (or DRHP), which contains all the information about the company. For a New launch IPO, the merchant banker also takes full responsibility for ensuring legal compliance throughout the process and marketing the issue.
Bankers to the issue prepare the papers for the funds in the issue process and thus enable the registrars to respond at the final stage of the basis of allotment by making clear the position of funds available to the registrars.
Registrar to the Issue they are involved in finalising the basis of allotment of an issue and sending refunds, allotment details etc. to the issuers.
Underwriters These are intermediaries who undertake to purchase securities offered by a company, if not all of the securities have been subscribed by the public.
Under Subscription If the bids received are less than the number of shares offered then the IPO is said to be undersubscribed.
Oversubscription: If the bids received exceed the number of shares issued then the New launch IPO is said to be oversubscribed.
Green-shoe option This green-shoe option enables the company to issue additional shares when there are more applications. The provisions regarding this are mentioned in the underwriting agreement.
- Becoming a public company is not an easy task for any businessman. It involves extensive paperwork and also has to comply with various market and legal safety norms. The company has to spend a lot of money to launch a public offer of its shares. Legal rules and costs are the two biggest responsibilities for companies. When a new company plans to file for an New launch IPO, it has to bear some of the things that some companies and old partners have to bear. At the same time, the risk of keeping a public company active is very high and it has to face various types of regulatory scrutiny all the time.
- If a company’s partners are not willing to raise funds to go public, they have a variety of other options to raise capital through private equity, venture capitalists, or angel investors.
- While IPOs provide investors with a great option to make money with their money, a lot of care and due diligence is required to make the most of this financial instrument. Since there is no historical data available in the public domain about the company launching the IPO, it can be difficult to gauge its financial health and stability, and this can significantly hamper your chances of making profits in IPO investing.
It is important for investors to analyze all the IPO details, the company’s current and future position, and future prospects. Also, they should make a decision based on their investment goals and risk tolerance. Overall, the current and upcoming activities in the New launch IPO market present significant opportunities for both investors and companies, which will also benefit the Indian economy.
Read Also: Know More About IPO Listing & Update