Table of Contents
WHAT IS INITIAL PUBLIC OFFERING (IPO)?
- It is the process by which a company can go public by sale of its stocks to general public.
- It is when the company decides to be listed on an exchange and hence goes public.
HOW DOES IT HELP A COMPANY?
- An IPO is a big step for a company.
- It provides the company with access to raising a lot of money.
- This gives the company a greater ability to grow and expand.
- The company which offers its shares, known as an ‘issuer’, does so with the help of merchant bankers. (Underwriters)
- After IPO, the company’s shares are traded in an open market.
- Those shares can be further sold by investors through secondary market trading.
ABOUT THE IRCTC IPO OFFER
WHAT WAS THE VALUATION OF IRCTC MADE BY UNDERWRITERS?
- Here the underwriters were IDBI Capital Markets, SBI Capital Markets and Yes Securities.
- They valued the company at over Rs 5,000 crore.
- Thus, the government raised Rs 645 crore for a 12.6% stake.
WHY THIS PROTEST?
- Since on the first day the share of IRCTC was listed at more than double the issue price of 310.
- This means the market pegged the valuation of IRCTC for more than Rs.11,000 crore.
- This led the IRCTC to lodged a protest about the price at which shares were offered to investors and has sought better due diligence for future transactions.
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