The initial public offering, or IPO, refers to the process of an enterprise offering additional shares to investors through the stock exchange in the hope of raising funds for its development.
Generally speaking, after an enterprise’s IPO is approved, the company can apply for listing in the stock exchange or quotation system, which is why we say “XYZ company is listed”. Simply put, an IPO is the first time a company raises money from the public, which is equivalent to going public.
Here’s an example:
Jack opened a Burger joint called “Burger Queen”.
The shop was doing well. Within two years, Jack had opened three branches one after another. But Jack is ambitious and wants to expand to 10,000 stores worldwide within five years. It’s a good idea, but it’s going to take a lot of money to open 10,000 stores. So where does all this money come from?
Jack had an idea. He could sell his Burger Queen shares on the market. He’s going to need $100 million to open 10,000 stores, so if he sells them for $5 a share, he can get someone to invest in the business.
In this case, Jack’s act of selling shares of his company on the public market is an IPO, also known as going public.
*Some features such as IPO are not available in AU/NZ on Tiger Trade.
