Towards the fulfillment of project program, a study was conducted at Stock Holding Corporation of India Ltd., Bangalore. The corporate exposure learning program involved in the study of Investors Perception on IPO’s and to analyze the selected IPO’s in the year 2006. Among various modes of raising fresh capital, the equity issue started gaining momentum in India during early 1980’s. It reached the peak during early 1990’s. Many companies made public issue during the year 2006. These companies raised funds by placing a high premium on the issue. Today most of these companies are trading not up to the expectation. The main objective of this study is to know the perception of the investors investing on IPO’s through SHCIL. And to anlayse the investment pattern of the investors on IPO’s. The study is being done from the investors point of view based on criteria of certain factors like issue price, listing price, and performance of these shares in a period of three months after the listing. For this study, top 10 companies which have highest issue size have been chosen. After a rigorous analysis of each company it was found that majority of the companies except one were over priced and are now generating negative returns.
This study also covers investors’ perception and preferences on IPO’s. It was found from the study that investors are happy with the performance of the IPO’s in India. They invest in IPO’s because of better returns. Most of the respondents feel better investing in IPO’s than investing on shares in secondary market, because they are satisfied with the returns and the security to their investment.
Initial public offering (IPO) refers to the offering of stock in a company to the public through the public market. In financial markets, an initial public offering is the first sale of a company's common shares to public investors. The company usually issues primary shares, but may also sell further shares. Typically, a company will hire an investment banker to underwrite the offering and a corporate lawyer to assist in the drafting of the prospectus. The sale of stock is overseen by financial regulators and where relevant by a stock exchange. It is usually a requirement that disclosure of the financial situation and prospects of a company be made to prospective investors. The IPO of a company serves as a significant liquidity opportunity for early investors, including founders and the venture capital investors. When a company goes public for the first time or issues a fresh stock of shares, it offers it to the public directly. This happens in the primary market. The primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is typically done through a syndicate of securities dealers. The process of selling new issues to investors is called underwriting. In the case of a new stock issue, this sale is called an initial public offering (IPO). Dealers earn a commission that is built into the price of the security offering, though it can be found in the prospectus. Basically, going public (or participating in an "initial public offering" or IPO) is the process in which a business owned by one or several individuals is converted into a business owned by many. It involves the offering of part ownership of the company to the public through the sale of debt or more commonly, equity securities (stock).
Advantages and Disadvantages of going public:
|Advantages |Disadvantages | |Stronger capital base |Short-term growth pressure | |Increases other financing prospects...
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