Initial Public Offer

IPO

An Initial Public Offering (IPO) referred to simply as an "offering" or "flotation," is when a company (called the issuer) issues common stock or shares to the public for the first time. They are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded.

In an IPO the issuer may obtain the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), best offering price and time to bring it to market.

An IPO can be a risky investment. For the individual investor it is tough to predict what the stock or shares will do on its initial day of trading and in the near future since there is often little historical data with which to analyze the company. Also, most IPOs are of companies going through a transitory growth period, and they are therefore subject to additional uncertainty regarding their future value.

Marketing

Suspense. Drama. Anxiety. Excitement. No, it’s not the release of a Bollywood blockbuster. It’s an IPO! And the verdict is out on the first day of
the release. Tech Mahindra’s IPO listed with a bang. GMR, on the other hand, was a flop show. IPO management seems to be fast catching on, with the “positioning” and “marketing” of an issue becoming as crucial to its success as the fundamentals of a company.

In many ways, marketing an IPO is akin to marketing a movie or an FMCG product, such as a cola or a pizza. These days, IPOs need a touch of brand marketing and management involving well-placed positioning and correct pricing. Following that, the company needs to wait for investors to bite the bait. Samsika Marketing Consultants MD Jagdeep Kapoor says, “Just as FMCG companies stimulate you to drink and consume their products, a company issuing an IPO should also excite you to ‘consume’ the IPO. If branding, timing, pricing and communication are not correct, the IPO will be lost.”... [continues]

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