What is an IPO? What is a NEW ISSUE?

23 March 2020 - 14:00
3 Min read
By IPOhub team

What is an IPO? What is a NEW ISSUE?

During these turmoil times the stock market can offer some very unique opportunities. As Warren Buffet once said : “Be fearful when others are greedy, and be greedy when others are fearful”. Given that at the moment of this writing the tone of the market is fearful, it might be time to look deeper into the opportunities SME growth market has to offer.

As the market has to offer to both expert and novice investors, we will look into some market terms that will help newer investors to better understand the stock market.


What is an ‘IPO’?

IPO is an acronym for ‘Initial Public Offering’, and is generally used for a company getting listed on a stock exchange for the first time.

This is usually the first time an investor has the opportunity to buy shares in a company and be a part of the company’s journey.

An IPO is, in reality, a combination of two things - it’s an offer to buy shares and also the listing of those shares on a stock exchange for the first time. The offer itself can either consist of newly issued shares that the company sells to raise capital or consists of existing shares sold by the company’s current owners, giving them an opportunity to have a partial exit (or it’s a combination of both).

Related What is the SME Growth Market?

New issue

What is a ‘new issue’?

A new issue is when a company issues new shares to sell to investors. This is generally done to raise new capital, but can also be done as a payment option in lieu of cash or as an offsetting issue to pay back loans.

There are several types of new issues such as ‘Rights issue’ and ‘Directed share issue’. New issues directed to the public in conjunction with a company being listed on a stock market is usually referred to as an IPO.

In our next post we will be explain the meaning behind “Rights Issue” and “Direct Share Issue”

Stay safe,

Your IPOhub team

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