If you are an entrepreneur, owning your own company, or whether you are an investor, you must be aware of IPOs (Initial Public Offerings). IPO is the first sale of stock by a company in order to raise funds. Now, IPO listing is not the only way to raise capital by a company; there are several other ways, but issuing stocks is the most popular and faster route. IPO listing is commonly done by the young entrepreneurial companies, thought any old existing companies also offer IPO as there are certain benefits of IPO listing. In this blog, we are going to list some top benefits of IPO listing for a company, which you should know whether you own a company or going to invest in a company.
Greater Access to Risk Capital
In some cases, raising equities from venture capitalists and other investors can be difficult for a company. The most common reason can be that these companies are not able to collaborate with potential investors. Even if an investor is present, they may not be willing to provide a trustworthy valuation to the venture. In this type of case, companies can get good benefits of ipo listing for seeking equity investments from the public, who can value the venture in an indulgent way. When companies issue an IPO, it can be the best option to raise a lot of money for clearing debts or investing in research and development, expanding their units, improving infrastructure, and many other reasons for their future development.
One of the main benefits of IPO listing is that it allows the companies to liquidate a part of their existing holdings. Sometimes what happens is that the stakeholders, employees, or venture capitalists of any company work too hard for achieving considerable success for the company. The company must have paid them in terms of equities, but when the company goes public and issues IPO, they can easily reap benefits in the form of cash.
Growth in Public Image
This point is more beneficial for a newly founded company. A new enterprise, after getting into IPO listing, can be benefitted by an increase in its public image. IPO can get more recognition for the company from customers as well as suppliers. One of the main benefits of IPO listing, in this case, is that most of the banks easily lend to the listed companies than non-listed companies. When a company is listed, it becomes more trustworthy in the market, providing the company with more visibility and creditability. In the case of IPO listing, the company becomes more transparent as it is mandatory for them to report their financial data to SEBI periodically.
Eases in Mergers and Acquisitions
When a company gets listed in the stock exchange after the process of IPO listing, it helps them in mergers and acquisitions. Because, whenever a public company has plans to enter for a merger or an acquisition deal with smaller enterprises, the term of the deal basically includes shares. In this way, the whole process gets simpler, and the valuations which are involved in the deal are largely market- driven. So, this is one of the benefits of IPO listing for a company, where the cash flow to the smaller companies in the case of mergers and acquisitions becomes effective and smooth.
Improves Monetary Situation of the Company
When a company goes public and gets into an IPO listing, it opens a way of generating a lot of liquidity and capital. These funds are useful for a better future for the company. IPO listing can help the company in improving its pecuniary situation as the company will be in a more stable financial condition. The funds can be used in any way which can prove to be more beneficial and rewarding for the company. This can further help the company in applying for loans and negotiating the terms of the loan.
Stock Options to Motivate the Employees
A company can always issue stocks to its employees, even in the case of private limited companies, and that’s what a labor law in India states. If a company turns into a public limited company and gets into IPO listing, one of the main benefits of IPO listing for the company will be that it can easily set up employee stock option plans. When a company introduces these types of plans in front of their employees, it is obvious that the employees will be motivated. Resultant, these employees will perform better in their designated roles.
As you can read above, there are lots of benefits of IPO listing for a company. But, if you think more widely, it’s not only beneficial for the companies but also for the investors who are investing in the IPO listing. A major factor for the companies going public is that every time companies cannot rely on the banks for fundraising options. IPO is one of the best ways to increase business growth as per the company’s business plan without any hassle.
No IPO found
|Issuer Company||Exchange||Issue Open|
|Yes Bank Ltd FPO||BSE, NSE||Jul 15, 2020|
|Rossari Biotech Ltd IPO||BSE, NSE||Jul 13, 2020|
|Reliance Industries Ltd. (RIL) Rights Issue||BSE, NSE|
|Antony Waste Handling Cell Ltd IPO||BSE, NSE||Mar 4, 2020|
|SBI Cards and Payment Services Ltd IPO||BSE, NSE||Mar 2, 2020|
|ITI Ltd FPO||BSE, NSE||Jan 24, 2020|
|Prince Pipes and Fittings Ltd IPO||BSE, NSE||Dec 18, 2019|
|Ujjivan Small Finance Bank Ltd IPO||BSE, NSE||Dec 2, 2019|
|CSB Bank Limited IPO||BSE, NSE||Nov 22, 2019|
|IRCTC Limited IPO||BSE, NSE||Sep 30, 2019|
|Issuer Company||Exchange||Issue Open|
|Billwin Industries Ltd IPO||BSE SME|
|Nirmitee Robotics India Ltd IPO||BSE SME||Mar 31, 2020|
|DJ Mediaprint & Logistics Ltd IPO||BSE SME||Mar 26, 2020|
|Laxmi Goldorna House Ltd IPO||NSE Emerge||Mar 20, 2020|
|Cospower Engineering Ltd IPO||BSE SME||Mar 17, 2020|
|RO Jewels Ltd IPO||BSE SME||Mar 12, 2020|
|SM Auto Stamping Ltd IPO||BSE SME||Mar 3, 2020|
|ICL Organic Dairy Products Ltd IPO||BSE SME||Jan 31, 2020|
|Chandra Bhagat Pharma Ltd IPO||BSE SME||Jan 31, 2020|
|Tranway Technologies Ltd IPO||BSE SME||Jan 27, 2020|