The number of IPOs launched in India has increased significantly over the past few years. More and more companies are offering their shares to raise capital. Investors are also finding success by buying company shares in IPOs. Recently, the number of HNI investors showing interest in IPOs has increased. Financial institutions are happy to offer loans to HNI clients for investing in IPOs. Even though many companies launch IPOs, only a few find success. Without the right funding strategies, a company might not find success on the listing day. Read on to understand how companies can succeed with IPO funding on listing day.
Understanding IPO funding
Did you know the meaning of IPO funding? Launching an Initial Public Offering (IPO) allows corporate entities to raise capital. The entire process of launching an IPO and collecting funds from investors is called IPO funding. When a corporate entity launches an IPO, it liquidates its shares for the first time for the public. It also marks the starting of a corporate entity as a public company. A company can issue new shares for investors in an IPO. Existing shareholders might also choose to liquidate their shares during an IPO launch. The process of IPO is not as easy as it seems. Companies conduct financial audits, planning, and research before launching an IPO.
An IPO’s success can define a corporate entity’s future as a public company. Companies try to attract HNI and UHNI investors in their IPOs to raise capital. Companies can clear debts, meet future demands, improve operations, or open new offices by raising capital in an IPO. After an IPO is successfully launched, shares of the particular company are available on stock exchanges. Investors with a trading/Demat account can buy shares of a specific public company on stock exchanges. To ensure a successful IPO, companies should follow the right strategies. Before launching an IPO, the company can advertise the number of shares to be liquidated. When more and more investors keep an eye on an upcoming IPO, it is bound to be successful.
Best practices for ensuring IPO funding success on the listing day
To ensure the success of an IPO, companies must follow the following practices:
- Every IPO comes with an issue price. It is the amount for an individual share within the public company. If IPO pricing is aggressive, a company might not attract many investors. Therefore, the issue price for an IPO must be reasonable to attract more and more investors. However, it does not mean the public company must go below its total valuation in deciding the issue price.
- The timing of an IPO matter in its success. You cannot launch an IPO during market disruptions and expect to reap great results.
- Give several days to investors to buy your shares. Do not close the listing too soon without selling a substantial number of shares.
- Try to create a buzz in the market for your upcoming IPO, even if oversubscription occurs. Oversubscription occurs when the total number of available shares is less than the demand in the market from investors.
Final words
Have you decided on your upcoming IPO’s lot size and issue price? Don’t forget to choose the right time to launch an IPO and make it successful. If the pricing of shares is conservative, you might attract HNI and UHNI investors to your IPO. So decide the right time to launch your IPO now!
