Question

Study the following case/situation and express your opinion.

Joy ltd. company is a newly incorporated company. It wants to raise capital for the first time by issuing equity shares.

1. Should it go to the primary market or secondary market to issue its shares?
2. Should it offer its shares through public offers or rights issues?
3. What will be the issue of Equity shares by Joy Ltd. co. called, IPO or FPO?

Answer 1

1. In primary markets, companies can raise capital for the first time from the public. So, Joy ltd. should go to the primary market to issue its shares since it is a newly incorporated company. 
2. Joy ltd. wants to raise capital for the first time by issuing equity shares. Initial Public Offer (IPO) refers to the process of offering shares of a company to the public for the first time. Therefore, Joy ltd. should offer its shares through public offer.
3. The issue of equity shares by Joy Ltd. Co. will be called as IPO which means Initial Public Offer.