What is an IPO?

An IPO or an Initial Public Offering is the set of stocks that a company sells for the first time to the public. This is done to expand the capital by going public.

Which Are The Companies That Can Issue An IPO?

IPOs are issued by private companies that plan to go public. Private Companies, who aim to maintain their standing, do not make investments in their shares available to the public. Some bigger market players have still not issued their IPOs: Mcdonald's and IKEA. A private company that intends to go public releases IPOs for the purpose. Government-owned companies divest a part of their stakes to the public. The largest-ever IPO issued in the Indian stock market was of Coal India Limited in the year 2010. National Highways Authority of India (NHAI) is the most recent IPO issue at National Stock Exchange.

Why Do Companies Issue Their IPOs, And Why do Some Companies don't Issue IPOs?

The financial benefit is the first and the most crucial direct benefit that a company derives from releasing an IPO.
The company widens its possibility of earning as it broadens its sphere of financial investors.
When the equity market experiences a financial boom, public companies experience increased profits during a bullish stock market.
Such benefits attract a company to go public.
The liquidity in the capital of the company increases. Since the company has gone public, it faces a bilateral benefit where it enjoys increased market share. More and more people get to know about the company and its offerings to raise awareness.
The companies can also assist in their merger and acquisition activities in return for the sale of their stocks.
A company increases its financial involvement in the market. Going public makes it mandatory for a company to share information. All company details come hand in hand with the sale of IPOs, which can be risky. It becomes a costly affair as the legal costs and management discrepancies due to the involvement of significant shareholders in the company's management become an expensive affair.

How do IPOs Affect the Economy of the Country?

An increase in the IPOs is always a good indication for a country's economy as it signals more funds into the share market.
During recessions, companies desist from stock trading due to looming losses.