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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. |
- Should it go to the primary market or secondary market to issue its shares?
- Should it offer its shares through public offers or rights issues?
- What will be the issue of Equity shares by Joy Ltd. co. called, IPO or FPO?
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Solution
- 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.
- 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.
- The issue of equity shares by Joy Ltd. Co. will be called as IPO which means Initial Public Offer.
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