IPO, or an Initial Public Offering, is the first time a company issues stocks for the purchase of the common public. Investors can then make gains on these stocks that may appreciate over the course of time. While there are many benefits of investing in an IPO, there are many risks associated with it as well. Therefore, before you invest in an IPO, you must understand the benefits of the IPO to investors.
Published on 15 July 2022
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Let us get into the benefits of investing in an IPO.
Why Should You Consider Investing in an IPO?
The most important reason to invest in an IPO is to buy shares of a company. This can be advantageous for you for many reasons. The first reason is that you would be able to get your foot in the door of a profitable company that might otherwise not be open for you. Moreover, there is no additional cost of buying IPO shares which can help you save money.
This is because underwriters are mostly given the responsibility of distributing these shares, and they do not charge money from the company that they are working with, unlike standard stocks in which the stockbrokers charge money for their services. Moreover, there is another benefit that is getting information about the company and the industry. If you buy shares in an IPO, you can get all the publically available information about the company and also any MNPI(Material Non-Public Information).
Let us get into the advantages of buying an IPO.
Benefits of Investing in an IPO
Here is the list of benefits of IPO to investors:
Higher liquidity
When the company goes public, investors can sell their shares in an open market. This helps the investors to earn profits without having to wait for their shares to be repurchased by another investor. Thus, if the shares of a company can be sold and bought anytime, it increases the liquidity for the investors. Thus, this is one of the major benefits of IPO to investors.
Diversification
When a company goes public, the shares trade among investors on an exchange. This creates an environment of diversification as no investor holds a majority stake in the shares of the company. Also, when investors invest in different companies, they tend to diversify their portfolios, which is good. This is one of the advantages of buying an IPO.
Greater access to capital markets
An IPO allows a company to raise money from institutional investors, which cannot be possible in the case of angel investors or venture capitalists due to other securities laws and legal restrictions.
Moreover, the exchanges are open markets that have different types of investors who can invest through brokers or dealers and other financial intermediaries. Thus, companies tend to have access to capital that otherwise they may not have.
Fulfil long-term goals
IPOs are equity-based investments, and they tend to be profitable in the long term. This is because the corpus that you build through investing in an IPO can be used to fulfil your goals and long-term objectives. Besides, the IPO market in India is growing at a tremendous rate, so it is one of the top benefits of investing in an IPO.
Greater price transparency
The price of each security being offered in an IPO is clearly mentioned in the document on the IPO order. Thus, this gives you the same information about the price as any big investor in the market. But, once the shares get listed on the stock market after the IPO, this scenario will change. The price of the stocks will be defined by the changing market circumstances and the price that your broker will offer. This is one of the top benefits of an IPO to investors.
Buy cheap and earn more
The price at which the IPO is offered is sometimes the lowest price when it comes to smaller companies that have the ability to grow bigger. It also happens that the shares get offered at a discounted price. There are many stories in the stock market where you will find such instances. Thus, this is one of the major benefits of investing in an IPO.
Stringent norms
To safeguard the investors, IPOs tend to be safer and more professional. The prospectus that the company provides to the investors carries all the information like the financials, growth, risks, and future plans. This gives the investors information about the company before they make a decision regarding investing in the IPO.
Conclusion
Thus, these are some of the top benefits of an IPO that you must know about. Before you invest in an IPO, it is important to understand the company’s strengths and weaknesses and then make a decision regarding investment. Also, assess your risk profile and then invest in an IPO accordingly.
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IPOs have become extremely popular these days, with many companies going public during the year. Many companies recorded record-breaking subscriptions. Many IT companies, BFSI companies, food and beverage companies, etc., captured the limelight when it came to IPO. Thus, IPOs have gained momentum in recent years and seem like they will continue to do so.
Initial Public Offering, also known as IPO, is the first time when a private company offers shares to the public. In this process, the ownership gets transferred- from being entirely privately held, the ownership of the company is given to the public.
IPO or the Initial Public Offering can be a much-hyped affair. With newspapers, brokers, Qualified Institutional Buyers(QIBs), retail investors, etc., tracking an IPOs every move, it can be hard to fathom why someone may like to withdraw their application. But there can be several reasons for an IPO withdrawal.
IPOs have become extremely popular these days, with many companies going public during the year. Many companies recorded record-breaking subscriptions. Many IT companies, BFSI companies, food and beverage companies, etc., captured the limelight when it came to IPO. Thus, IPOs have gained momentum in recent years and seem like they will continue to do so.
Initial Public Offering, also known as IPO, is the first time when a private company offers shares to the public. In this process, the ownership gets transferred- from being entirely privately held, the ownership of the company is given to the public.
IPO or the Initial Public Offering can be a much-hyped affair. With newspapers, brokers, Qualified Institutional Buyers(QIBs), retail investors, etc., tracking an IPOs every move, it can be hard to fathom why someone may like to withdraw their application. But there can be several reasons for an IPO withdrawal.
Sharekhan Comtrade Private Limited (TM) operates the web site accessible from the URL www.myespresso.com (the “web site”').
Sharekhan Comtrade Private Limited is committed to protecting your privacy and utilising technology that gives you the most powerful, safe, online experience that you can get anywhere else.
Sharekhan Comtrade Private Limited does, however, gather certain information that is provided by you to the Web Site. Sharekhan Comtrade Private Limited believes that by collecting this information Sharekhan Comtrade Private Limited is able to provide you with a personalised web experience, and to assist its own sales team and advertisers in efficiently reaching an appropriate audience.Sharekhan Comtrade Private Limited does, however, gather certain information that is provided by you to the Web Site. Sharekhan Comtrade Private Limited believes that by collecting this information Sharekhan Comtrade Private Limited is able to provide you with a personalised web experience, and to assist its own sales team and advertisers in efficiently reaching an appropriate audience.
Sharekhan Comtrade Private Limited requests the minimum information it believes necessary to achieve this goal.
The following discloses Sharekhan Comtrade Private Limited's information gathering and dissemination practices for the Web Site:
System Data:
Sharekhan Comtrade Private Limited uses your IP address to help diagnose problems with our server and to administer the web site. Your IP address is used to identify you and your shopping cart and to gather broad demographic information.
Registration Data:
The Web Site's registration form may require users to give us contact information (like their name, phone number and e-mail address), unique identifiers (like their PAN Number) and demographic information (like their pin code, age or income level). The Web Site uses customer contact information from the registration form to send the users information about Sharekhan Comtrade Private Limited and promotional material from some of Sharekhan Comtrade Private Limited's partners. The customer's contact information is also used to contact the visitor when necessary. Unique identifiers (such as PAN numbers) are collected to verify the user's identity. Demographic and profile data is also collected at the Web Site. We use this data to tailor the visitor's experience at the Web Site, showing them contents that we think they might be interested in, and displaying the contents according to their preferences. This information is shared with advertisers on an aggregate basis.
Links and Co-Branded Sites:
This site contains links to other Web Sites which are not necessarily been screened or reviewed by www.myespresso.com. Sharekhan Comtrade Private Limited is neither responsible for the privacy practices or the contents of such Web Sites nor shall be held answerable for the inaccurate, inappropriate or offensive data, material, information, products and services that may be viewed on those sites.
Sharekhan Comtrade Private Limited may operate a number of co-branded sites. Policies regarding information collection and sharing may differ on some of these co-branded sites. If you have any particular questions, you should check the privacy statement that appears on each co-branded site.
Order Forms:
The Web Site uses an order form for customers to request information, products and services. The Web Site collects visitors' contact information (like their mobile number or e-mail address), unique identifiers (like their PAN number) financial information (like their account or credit card numbers) and demographic information (like their pin code, age or income level). Contact information from the order form is used to send orders, information about Sharekhan Comtrade Private Limited, and promotional material from some of Sharekhan Comtrade Private Limited's partners to the visitors of the Web Site. The visitor's contact information is also used to get in touch with the visitor when necessary. Financial information that is collected is used to check the users' qualifications and bill the user for products and services. Unique identifiers (such as PAN numbers) are collected from Web Site visitors to verify the user's identity.
Surveys and Contests:
The Web Site's online surveys ask visitors for contact information (like their mobile number or e-mail address) and demographic information (like their pin code, gender, age or income level). The Web Site uses contact data from its surveys to send the user information about Sharekhan Comtrade Private Limited and promotional material from some of Sharekhan Ltd.'s partners. The customer's contact information is also used to contact the visitor when necessary. Users may opt-out of receiving future mailings; see the choice/opt-out section below. Demographic and profile data is also collected at the Web Site. The Web Site use this data to tailor its visitor's experience at the Web Site, showing them content that it thinks they might be interested in, and displaying the content according to their preferences. This information is shared with advertisers on an aggregate basis.
Sharekhan Comtrade Private Ltd run contests on the Web Site in which we ask visitors for contact information (like their e-mail address). Sharekhan Comtrade Private Limited uses contact data from its contests to send users information about Sharekhan Comtrade Private Ltd. and promotional material from some of our partners. The customer's contact information is also used to contact the visitor when necessary. Users may opt-out of receiving future mailings; see the choice/opt-out section below.
Third-Party Advertisement Servers:
Sharekhan Comtrade Private Limited engages the services of an outside advertisement company to display advertisement on the Web Site. These advertisements may contain cookies. While Sharekhan Comtrade Private Limited uses cookies in other parts of the Web Site, cookies received with banner advertisements are collected by the Advertisement company, and Sharekhan Comtrade Private Limited does not have access to this information.
Protection of your Data and Information:
The privacy and protection of your data and information provided to us is of vital importance. Sharekhan Comtrade Private Limited shall ensure to safeguard the security and confidentiality of any information you share with us. Any personally identifiable information of the customers obtained by us shall not be used or shared other than for the purposes to which the customers consents. However security and confidentiality of information cannot be guaranteed cent percent. Hence despite our utmost efforts to protect your personal information, Sharekhan Comtrade Private Limited and www.myespresso.com cannot warrant the security of any information you transmit to us through our online services. Such transmission of your personal information is done at your own risk.
Disclosure of Customer Information :
Sharekhan Comtrade Private Limited and www.myespresso.com shall not deliberately disclose customer's personally identifiable information to any unauthorized third person, save and except where such information shall be disclosed in good faith and for the purpose of law for the time being in force or to protect the rights and property of Sharekhan Comtrade Private Limited and www.myespresso.com.
Public Forums :
The Web Sites makes chat rooms, forums, message boards and/or news groups available to its users. Please remember that any information that is disclosed in these areas becomes public information and you should exercise caution when deciding to disclose your personal information.
Supplemental Information :
The Web Site supplements the information that you provide with information that is received from third parties.
The Web Site DOES NOT entice by the prospect of a special game, prize or other activity, to divulge more information than is needed to participate in the activity.
Further to the above, in light of the recently notified Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011. (Hereinafter referred to as the Rules)
The following shall be deemed to be sensitive information :
Password;
Financial information such as Bank account or credit card or debit card or other payment instrument details;
Physical, physiological and mental health condition;
Sexual orientation;
Medical records and history;
Biometric information;
Any detail relating to the above clauses as provided to body corporate for providing service; and
Any of the information received under above clauses by body corporate for processing, stored or processed under lawful contract or otherwise:
provided that, any information that is freely available or accessible in public domain or furnished under the Right to Information Act, 2005 or any other law for the time being in force shall not be regarded as sensitive personal data or information for the purposes of Rules.
Collection of Information:
Compliance with KYC guidelines as per SEBI / Exchanges / Or any other Act, law or regulation requiring the same and any internal KYC guidelines formulated by Sharekhan Comtrade Private Limited.
In order to provide enhanced trading experience to the client.
In order to provide any further information to be provided to regulators.
Such information may be collected in a manner that the client is always aware of the collection and purported usage of the same. The client shall have an option to withdraw consent to share the information. However such intimation shall be required in writing. Such intimation shall only be taken into account from the date on which the same is received. Sharekhan Comtrade Private Limited may choose to stop services to such a client in case such intimation is received. Such information shall only be used for the purpose it is collected.
Clients would be allowed an option not to disclose any information to be collected, provided the same is in compliance with regulatory requirements.
Disclosure of information:
Disclosure of sensitive information would be as per the terms agreed by the clients. For any change in such terms, the clients would be informed.
Provided no consent may be required in case the same is being shared as per compliance guidelines or as required by regulators.
Any information being disclosed to third parties would be in accordance with the Rules and would be done provided such third party has the same level of compliance guidelines as Sharekhan Comtrade Private Limited.
Sharekhan Comtrade Private Limited shall allow clients to review their personal information and the same shall be allowed to be edited provided exchange guidelines relevant to the same are followed.
Sharekhan Comtrade Private Limited shall maintain reasonable security practices and procedures and maintain a comprehensive documented information security programme. In the event of an information security breach, Sharekhan Comtrade Private Limited or a person on its behalf shall be required to demonstrate as and when called upon to do so by the agency mandated under the law, that there have implemented security control measures as per their documented information security programme and information security policies and information security policies that contain managerial, technical, operational and physical security control measures that are commensurate with the information assets being protected with the nature of business.
KYC Languages
Download Client Registration Documents (Rights & Obligations, Risk Disclosure Document, Do's & Don't's) in Vernacular Language :
Note: "This document is a translated version of the client registration documents in English and is being provided in vernacular language to facilitate better understanding by the investors. In case of any ambiguity, the contents of the English version would prevail."
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