An initial public offering (IPO) occurs when a private company sells shares to the public for the first time on a stock exchange. This process transforms a private company into a public company and allows it to raise expansion capital while providing a return to early private investors. Companies work with an investment bank to underwrite the IPO, which involves filing documents with regulatory agencies, determining the stock price based on market conditions, and selling shares to investors.

2.  An initial public offering (IPO) or stock market
launch is a type of public offering where shares
of stock in a company are sold to the general
public, on a securities exchange, for the first time.
 Through this process, a private
company transforms into a public company.

3.  IPOs are used by companies to
 Raise expansion capital,
 Monetize the investments of early private investors,
 Become publicly traded enterprises.
 A company selling shares is never required to
repay the capital to its public investors.
 After the IPO, when shares trade freely in the
open market, money passes between public
investors.

4.  Net tangible assets of Rs. 3.00 Crores in each of
the preceding 3 years.
 Track record of distributable profits at least 3 out
of 5 preceding years.
 The company has a net worth of Rs. 1.00 Crore in
preceding 3 years.
 The proposed issue should not exceed 5 time of its
Pre-issue.

5.  When a company is aiming to go public, at first
it hires an investment bank to do the
underwriting, the way of raising money through
equity or debt, functions associated with the
issue.
 Although, a company itself also may sell its
shares but, usually an investment bank is
selected for that purpose. Underwriters act as
intercessors between the public, who are
investing, and the companies.

6.  The investment bank and the company will first
initiate the process of deal negotiation. The main
discussing issues are the money amount that the
company is going to raise, security type to be
issued and all the other details involved with the
underwriting agreement.
 Once the deal gets finalized, the investment bank
sets a registration statement up which will be
submitted to the Securities and Exchange
Commission. That registration statement consists
of information regarding the offering and also
other company information like, background of
the management, financial statements, legal
issues etc.

7.  Then the Securities and Exchange Commission (SEC)
needs a cooling off period during which it will
examine all the submitted documents and make
sure that all information regarding the deal have
been given to them.
 After getting the SEC's approval, a date is fixed on
which the company will offer the stock to the
public.

8.  Now, the underwriter publishes an initial
prospectus that contains all the necessary
information regarding the company.
 The effective date of issuing the stock as well as
the price have not been mentioned in the
prospectus, for these are not known at this time.
 Then the company and the underwriter meets to
decide the price of the stock. This decision
depends highly on the current market condition.
 Lastly, the stocks are sold in the market and
money is raised from the investors.

9.  Registrars process the application forms,
tabulate the amounts collected during the
issue and initiate the allotment procedures.

10.  Recognized members of the Stock Exchanges
are appointed as brokers to the issue for
marketing the issue.
 They are eligible for a maximum brokerage
of 1.5%.

11.  Lawyers are appointed by company to ensure
that all the agreements they enter are as per
the rules and regulations.

12.  A draft prospectus is prepared giving out details of
the company, promoters, background,
management, terms of the issue, project details,
modes of financing, past financial performance,
projected profitability and others.
 The lead manager has to verify and certify the
facts stated in the draft prospectus and ensure
that the company is not making any false claims.
Which is to be filed with SEBI (Securities and
Exchange Board of India) 21 days before IPO, SEBI
gives its observation and recommends necessary
changes.

13.  The prospectus along with the copies of the
agreements entered into with the Lead Manager,
Underwriters, Bankers, Registrars and Brokers to
the issue is filed with the Registrar of the
Companies of the state where the registered
office of the company is located.

14.  The prospectus and application forms are
printed and dispatched to all the merchant
bankers, underwriters, brokers to the issue.

15.  Book building is usually a process used in IPO
which helps to determine price and demand
discovery.
 It is a process used for marketing a public offer of
equity shares of a company. It is a process where,
during the period for which the book for IPO is
open, bids are collected from investors at various
prices, which are above or equal to floor price.
 The offer/issue price is then determined after the
last date of IPO based on certain evaluation
criteria.

16.  The underwriters are appointed who commit to
shoulder the liability and subscribe to the shortfall
in case the issue is under-subscribed. For this
commitment they are entitled to a maximum
commission of 2.5% on the amount underwritten