If you have been flipping through the pages of the newspaper or just browsing through the news, then you must have come across the word ‘IPO’. There is often news of IPO and its buzz among the public in every business news that you come across. That often makes one wonder about IPO and the hype around it. Is it really a gold rush as people portray it or not? Are you really missing out by not investing in the IPO? We here look around the IPO and whether the hype is real or not. Read along.
What is IPO?
IPO as a term refers to Initial Public Offering. Often the privately held companies going public in a bid to raise the capital. This is done by issuing new shares to the general public that were previously held by the founders and the early investors. IPO allows a company to raise capital and utilize the investment to boost their operation and scale up their business.
The general perception around IPO is that the shares will soar higher in value later on and getting as early as you can on this very train can help your investment soar multifold. It’s a reason why there’s such a buzz whenever news of IPO comes in. We here look at the benefits of investing in IPO and seek is it’s a good proposition or not down below.
Benefits of Investing in IPO
Investing in IPO has its own set of benefits. There are plenty of chances you can strike it rich when it comes to IPO. And that’s not the only one. Read along as we depict the benefits of investing in IPO.
Opportunity to Unearth Quality Stocks
IPO is a perfect way to unearth quality stocks that are yet to be listed. There are plenty of companies that tend to go the route of IPO later on in their journey. These companies tend to provide a great opportunity for anyone who is looking to invest in the market. For say, the names like Dr. Lal Pathlabs, SBI Life, ICICI Lombard, D-Mart have gone the route of IPO. These names are one of the leading ones in the segment and by going the IPO route they present an opportunity for the public to invest in them.
Get an Early Start
The phrase ‘early bird gets the worm’ fits perfectly in the case of IPO. Investing in IPO gives you an early head start when it comes to investment. You can enter the very beginning ground of the company and get an opportunity to witness the company from being a mere beginner to finally realizing its full potential. In the meantime, your wealth will also grow multifold. For say, you invest in the IPO of a young company that deals in products which are set to take the market with a storm later on. The company sways the market and gains momentum allowing it to be one of the top companies later on. Your initial investment in IPO will grow multifold with time and you can grow to see your wealth multiply the same.
Basis for Long term Financial Goals
Simply put investing in IPO is a kind of equity investment, the only difference being in IPO you invest at the very beginning of the company, while during the equity investment you tend to opt for shares anytime as per your need. The thing about equity investment is that it helps to fulfil financial goals in the long run. we all tend to have financial goals be it buying a dream car or a house or even seeking retirement funds. Investing in IPO can help you to fulfil your long term financial goals by helping you to grow your investment multifold. And with the IPO market growing, it’s a good time to cash on them.
Transparency
The thing about secondary markets is that the institutional investors, insiders, and analysts tend to have the edge over the small investors when it comes to information and their availability. But in case of IPO investment, the details are mentioned in the prospectus of the company and as a retail investor, you have the leverage of finding the same level of information as others. Also, IPO tends to list the price of the security clearance in the order document which helps to create an equal playing field for all the investors.
Cash on the Big Payout
One of the merits of investing in IPO is that the companies tend to grow big with time and with that your investment value will also accrue to be larger than it was when you started out. Plenty of small companies opt for IPO in order to get capital that they can utilize to grow big. When you invest in IPO of such companies you can potentially see your investment value increase multifold later on and cash them out for a big amount.
Investing in IPO comes forth with a great set of benefits and it’s a reason why IPO is such a buzz word around. IPO’s have also become a profitable opportunity for a person to invest in among all investment options. It’s not to say, that IPO is empirically the best of the lot, but it does present a great way to build wealth in the long run and the hype is totally warranted.