Are you curious to know what is public issue? You have come to the right place as I am going to tell you everything about public issue in a very simple explanation. Without further discussion let’s begin to know what is public issue?
In finance, a public issue refers to the process of offering new securities, such as stocks, bonds, or debentures, to the general public for the first time. It is a critical step for companies that are looking to raise capital from the public to fund their business operations, expansion plans, or other initiatives. In this blog, we will discuss in detail what a public issue is, how it works, and its benefits for companies and investors.
What Is Public Issue?
A public issue is a process by which a company offers its securities to the general public, including individual investors and institutional investors, through a public offering. This is done to raise capital for the company, which can be used to fund its business operations, expand its operations, invest in new projects, or pay off debt.
Types Of Public Issues
There are two types of public issues:
- Initial Public Offering (IPO) – This is the first time a company offers its securities to the general public. In an IPO, the company hires an investment bank or underwriter to manage the process, set the price of the securities, and distribute them to investors.
- Follow-on Public Offering (FPO) – This is when a company issues additional securities to the general public after an IPO. FPOs are typically done when a company needs to raise more capital for growth or expansion plans.
How Does A Public Issue Work?
The process of a public issue involves several steps:
- Planning and Preparation – The company decides to go public and hires an investment bank or underwriter to manage the process. The company also prepares a prospectus, which includes details about the securities being offered, the company’s financials, and other relevant information.
- Securities Registration – The securities being offered are registered with the Securities and Exchange Board of India (SEBI), which regulates public issues in India.
- Price Determination – The investment bank or underwriter sets the price of the securities based on market demand and other factors. This is done through a process called book-building, where investors bid for the securities.
- Distribution – The securities are then distributed to investors through the stock exchange or other intermediaries.
Benefits Of A Public Issue
For companies, a public issue provides several benefits, including:
- Access to Capital – A public issue allows companies to raise capital from a large number of investors, which can be used to fund their growth and expansion plans.
- Enhanced Visibility – Going public can increase a company’s visibility and exposure in the market, which can help attract new customers, partners, and investors.
- Liquidity – Publicly traded securities are more liquid than private securities, which can provide investors with an exit option and increase the value of their investments.
For investors, a public issue provides several benefits, including:
- Access to New Investments – A public issue provides investors with access to new investment opportunities, which can help diversify their portfolios and increase their returns.
- Transparency – Companies going public are required to disclose detailed financial information and other relevant information, which can provide investors with more transparency and clarity.
Conclusion
In conclusion, a public issue is a critical step for companies that are looking to raise capital from the public to fund their growth and expansion plans. It allows companies to access a large pool of capital and provides investors with access to new investment opportunities. However, going public also involves significant costs and regulatory requirements, which companies need to carefully consider before embarking on this path.
FAQ
What Is A Public Issue In India?
Public Issues or Public Offering refers to the issue of shares or convertible securities in the primary market by the promoters of a company to attract new investors for a subscription. Section 23 of the Companies Act, 2013 prescribes the provisions for issuing of shares.
What Is A Public Issue And Its Type?
There are three types of Public Issues by which a public company can raise funds: (a) IPO: Initial Public Offer, which is once in the Company’s lifetime (b) FPO: Follow-on Public Offers, which a Company can raise any number of times (c) Rights Issue: When a Company makes an Offer to raise capital from its existing
What Is A Public Issue In One Sentence?
When a company raises funds by selling or issuing its equity shares to the public through an offer document it is called a public issue.
What Is Public Issue Class 12?
Solution. Shares offered to the public by a company through the prospectus are called as a public issue. Concept: Methods of Issue of Shares.
I Have Covered All The Following Queries And Topics In The Above Article
What Is Public Issue Management
What Is Public Issue Of Shares
What Is The Issue With The Public Cloud
What Is Public Issue Answer In One Sentence
What Is A Public Issue
What Is Issue Management In Public Relations
What Is Public Issue Of Shares
Public Issue Wikipedia
What Is Public Issue Answer In One Sentence
What Is Public Issue Through Prospectus
What Is Public Issue Management
Procedure For Public Issue Of Shares
What Is Public Issue In Primary Market
Types Of Public Issue Management
What Is Public Issue
