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IPO (Initial Public Offering) is a process of launching a company from private to public in the trading market for the first time. Many private companies are limited by the shares and its shareholders. It distributes its ownership by going public through its shares’ trading and this way, it gets listed on the stock exchange. If a company plans to go public, it hires an investment bank to handle the IPO. The company and the bank discuss and work out all the financial details of the company in an agreement which is known as an Underwriting Agreement. After entering into the agreement, they record the registration with the Securities and Exchange Commission (SEC). The security exchange verifies all the given data and the details and if everything is aligned correctly, then it allows the company to announce a date to offer IPO.
It is important to note that your ability to obtain ,unlisted pre IPO shares of any new issue security may be considerably limited. After the issuance of the IPO, shares begin trading on the market shortly thereafter. Most investors are able to access those shares more readily.
When a new business or potential companies transition from private to public ownership, it sells its shares of the stock for the first time to the public and the process it goes through is known as an initial public offering (IPO).
But even before a company goes public, it usually sets aside large blocks of shares to institutional and individual (retail) investors to help fasten the process to raise capital. The pre-IPO shares offer a popular way for private companies to raise capital in advance of a public offering.
What attracts people to invest in pre-IPO?
The seasoned investors and large private equity players find an opportunity to invest in such startup pre-IPOs as they can sell their shares for a much higher rate once the company goes public. These investors generate passive income through dividends over time. Also, pre-IPO investments are less likely to be affected by societal events, hence aren’t impacted by the fluctuations within the stock market, as shares are not yet made public.
Reasons to jump on IPO investment
IPO investment is equivalent to equity investment. IPOs have a great potential to bring a lot of profits in the foreseeable future. Indian IPO market is growing rapidly and according to a study, in 2017, it has generated 11 billion through IPOs.
Generally, the investors cannot invest in the right share due to the lack of financial status availability of the company. While investing through Unlisted Assets, you get transparency of the price like the big investors and their networks do. They provide a list of the price of the securities in the IPO order. After the company is turned into an IPO then the share prices will highly depend on the market fluctuations. Unlike other platforms, Unlisted Assets safeguard your pre-IPO stock purchase and also provide safe escrow banking arrangements.