When an issue / offer of securities is made to new investors for becoming part of shareholders family of the company it is called a public issue. Public issue can be further classified into Initial public offer (IPO) and Follow on Public Offer/Further public offer (FPO). When an unlisted firm offers it securities to public it is called IPO whereas when an already listed firm offers fresh securities then it is called FPO. This article will help you understand the IPO research process better.
Why IPO research is necessary for investment bankers
Investment bankers are the ones who underwrite the IPO offers of various companies. In the whole process they make profit in terms of underwriting fee and the margin on resale of IPOs in the secondary stock market. As the underwriters invest money in large proportions in IPOs, they are at a huge financial risk. This is what requires them to do the necessary research work before they assist any company with the issue or underwriting of their IPOs.
Important points underlying the research
Research work before the issue of IPOs is necessary in order to make sure that the IPO issue sails smoothly through the tough waters of legal complications and stringent provisions laid down by SEBI. Be it mutual fund research or research related to IPO; investment bankers have a great role to play in mostly all financial matters. Investment bankers make sure that the company issuing IPO has a good fiscal health and has answers to all legal issues in place. They also go through the prospectus of the company to ensure the safety of their funds.
Other points
Investment bankers assist the companies in deciding the price of IPO. They also help the company in taking decisions related to the number of shares to be issued. All these things demand extensive research work on the part of investment bankers in order to take accurate and informed decisions. The mutual fund research companies are also very much interested in IPOs as it might help them to generate great profits. If the IPO issue is successful, the share prices of the company are sure to rise. Mutual funds companies invest in IPO and make huge profits by selling these shares once their prices rise.
Why IPO research is necessary for investment bankers
Investment bankers are the ones who underwrite the IPO offers of various companies. In the whole process they make profit in terms of underwriting fee and the margin on resale of IPOs in the secondary stock market. As the underwriters invest money in large proportions in IPOs, they are at a huge financial risk. This is what requires them to do the necessary research work before they assist any company with the issue or underwriting of their IPOs.
Important points underlying the research
Research work before the issue of IPOs is necessary in order to make sure that the IPO issue sails smoothly through the tough waters of legal complications and stringent provisions laid down by SEBI. Be it mutual fund research or research related to IPO; investment bankers have a great role to play in mostly all financial matters. Investment bankers make sure that the company issuing IPO has a good fiscal health and has answers to all legal issues in place. They also go through the prospectus of the company to ensure the safety of their funds.
Other points
Investment bankers assist the companies in deciding the price of IPO. They also help the company in taking decisions related to the number of shares to be issued. All these things demand extensive research work on the part of investment bankers in order to take accurate and informed decisions. The mutual fund research companies are also very much interested in IPOs as it might help them to generate great profits. If the IPO issue is successful, the share prices of the company are sure to rise. Mutual funds companies invest in IPO and make huge profits by selling these shares once their prices rise.
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