IPO full form is simple – Initial Public Offering.
But what does it mean? Each word in this full form has a specific meaning and that is why it is abbreviated as IPO. Let’s break it down to understand the gist of this technical term, especially for beginner level traders.
Initial implies something that is at the onset, at the start, in the beginning.
Public means this particular term has something to do with people, common public on the roads, you, me, anyone.
Offering implies there is something to offer, to be given. Since we are talking about the stock market, it obviously will be something related to finance.
IPO Full Form in Share Market
Now, this needs to be understood that an IPO is launched by a company, a business – most of the times small or medium, few times it is a big name. Thus, if put in other words, with an IPO, a small business is coming out to the public – to offer a financial product – that is obviously related to his or her company.
Now, when a company is offering something, they will need something in return as well.
Thus, going relatively technical, with an IPO, business looks to raise monetary funding from the general public in exchange for a share in the business (the financial product!).
Full form of IPO has been kept aptly and with precision so that it is self sufficiently understood.
Well, one thing you must always understand is that a Demat Account is an absolute necessity in order to apply for an IPO.
Get a detailed review of some of the top IPOs of the 2020 like the one Burger King IPO.
IPO Full-Form Example
Nonetheless, let’s quickly go through a basic example to understand IPO:
Let’s say you own 2 Pizza Stores. One in Mumbai, another one in New Delhi. You have been running this business for the last 10 years and you have an average brand recall.
Now, you are thinking of expanding your presence to 5 other metro cities in India. However, you do not have that kind of cash with yourselves.
What Options do you have?
Yea, you can go to a bank but that would imply paying off a certain interest on the principal loan.
You can find an investor but can hamper your business vision, in case the frequencies do not match later down the line.
Or you may go with the IPO option where you work with an investment banking firm, get yourself valued and sell your business shares to the general public.
With the money you raise, you can put that in your business expansion while retail investors buy a specific percentage of stake in your company.
Is IPO Full Form in Share Market same as IPO Full Form in Banking?
Yes, there is no difference. Although, a few salespeople (no offence!) from different business verticals might want to influence you with the usage of some technical jargons and confuse you in order to sell their product/service. But rest assured, there is not an inch of a difference when this term is used in the stock market or in the banking space.
So that is it as far as the review of IPO Full form was concerned. To let you know IPO full form in banking is similar to what is used as the full form of IPO in the share market. No difference!
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