FINANCE IS ONE OF THE INTERESTING SUBJECT AND IT HAS MORE OPPORTUNITY AND MORE CAREER GROWTH.
NOW THERE ARE SOME FINANCIAL JOB THAT PAY U MORE BUT AT THE SAME TIME IS MORE CHALLENGING AND VERY EFFICIENT.
FURTHER I ADD SOME OTHER TERMINOLOGY TO HELP OTHERS IN UNDERSTANDING FINANCIAL TERM AND MY SINCERE REQUEST TO ALL FINANCE GUYS PL Z READ ECONOMICS TERM AND ALWAYS KEEP TOUCH WITH RBI. WEBSITES.
NOW STARTS WITH STOCK EXCHANGE..... SO IT STARTS WITH PUBLIC OFFERING SO HERE IS DESCRIPTION OF IPO :
An initiial public stock offering (IPO) referred to simply as an "offering" or "flotation," is when a company (called the issuer) issuescommon stock or shares to the public for the first time. They are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companiesalooking to become publicly traded. In an IPO the issuer may obtain the assistance of an underwritting firm, which helps it determine what type of security to issue (common or preferred), best offering price and time to bring it to market. An IPO can be a risky investment. For the individual investor, it is tough to predict what the stock or shares will do on its initial day of trading and in the near future since there is often little historical data with which to analyze the company. Also, most IPOs are of companies going through a transitory growth period, and they are therefore subject to additional uncertainty regarding their future value.
IPOs generally involve one or more investment banks as "underwriters." The company offering its shares, called the "issuer," enters a contract with a lead underwriter to sell its shares to the public. The underwriter then approaches investors with offers to sell these shares.
The sale (that is, the allocation and pricing) of shares in an IPO may take several forms. Common methods include:
A large IPO is usually underwritten by a "syndicate" of investment banks led by one or more major investment banks (lead underwriter). Upon selling the shares, the underwriters keep a commissiongross spread). Usually, the lead underwriters, i.e. the underwriters selling the largest proportions of the IPO, take the highest commissions—up to 8% in some cases. based on a percentage of the value of the shares sold (called the
Multinational IPOs may have as many as three syndicates to deal with differing legal requirements in both the issuer's domestic market and other regions. For example, an issuer based in the E.U. may be represented by the main selling syndicate in its domestic market, Europe, in addition to separate syndicates or selling groups for US/Canada and for Asia. Usually, the lead underwriter in the main selling group is also the lead bank in the other selling groups.
Because of the wide array of legal requirements, IPOs typically involve one or more law firms with major practices in securities law, such as the Magic Circle firms of London and the white shoe firmsNew York City. of
Usually, the offering will include the issuance of new shares, intended to raise new capital, as well the secondary sale of existing shares. However, certain regulatory restrictions and restrictions imposed by the lead underwriter are often placed on the sale of existing shares.
Public offerings are primarily sold to institutional investors, but some shares are also allocated to the underwriters' retail investors. A broker selling shares of a public offering to his clients is paid through a sales credit instead of a commission. The client pays no commission to purchase the shares of a public offering; the purchase price simply includes the built-in sales credit.
The issuer usually allows the underwriters an option to increase the size of the offering by up to 15% under certain circumstance known as the greenshoe or overallotment option.
