Simply we can understand the IPO as the ownership of the shareholder in the company. An IPO is done by a company for increasing the capital of the company. Let us understand it from the start. As a person starts a business on a small scale then he adds his/her family members or relatives to that business. These shareholders are known to be angel investors. Now as the company grows and arrives at such a level (generally, approx $1 billion known as unicorn status) now it needs more funds and profit to have a boost in the company. So it is decided to register the company with SEC. The whole process is regulated by the (Securities And Exchange Board Of India). After the registration of a company with SEO, some advertisements are done, to make people know more about the company. An IPO is a great achievement for the company as it allows it to raise a lot of money. This gives opportunity to the company to expand and grow exponentially. Till IPO the company was private share ownership and after it converts into public share ownership.
Now billions of people have the opportunity to buy and sell the company share as per their choice. Now as the company will get profit, the shareholders of that company will too get the amount of profit as the number of shares with them. The market values of the company, frequency of selling, and purchasing many factors decide the price of equity for the company.
❖ DEMATE ACCOUNT
As for storing money, we have a bank account similarly for storing the stocks electronically the user must have a demate account. As the full form of demate account is Dematerialised account. The main purpose for making demate accounts for users, who deal in the stock market is to reduce paperwork and do it electronically. The demate account just converts the user’s physical share in the electronic form and store in an account. After this, share trading got so easy that, users can buy or sell stocks from anywhere in the world. The demate account of the user can hold all the stocks, mutual funds, government securities, exchange-traded funds in one place that is demate account. So, an investor who wants to buy or sell stocks or trade has to open demate account. The user can open his/her demate account in just a few minutes of the online process. He/She must be 18 or above and has a pan card number of his/her. There are many benefits of having a demate account:-