All the companies in the world can easily divide in to two categories, one is Private companies and the other is Public companies.The ownership of private companies are belongs to the people who invested on that company and the owners of that companies. But this is different in Public companies.But in Public Companies the ownership of that companies are not only bound to its pre owner and the ownerships is divide in to the every person who invest in that company.Company can generate more capital from this initial public offering process (IPO) so companies can expand further from this IPO and this is the main scope from IPO.
For example the person who got one share of the company is also an owner of that company. We can say that IPO is that tool that combined Private Company in to public company.
This is also a method that the ownership of the company is open to general public so that they can invest their money to that company and become an owner of the company.
The companies got Public through IPO normally Says Public Liable Companies (PLC) for example some popular companies  in CSE Stock Exchange such as JOHN KEELLS HOLDINGS PLC, COMMERCIAL BANK OF CEYLON PLC, DIALOG AXIATA PLC, HATTON NATIONAL BANK PLC etc are some very popular Public Liable companies in Sri Lanka and there are 295 companies listed in Colombo Stock Exchange as a Public Liable Companies.
Some times you may think that why companies get public and open the ownership of their companies to general public.
So from initial public offering company can increase their assets and it may useful to expand the company to bigger. new It also easy to get loan for Public Liable companies rather than Private companies.
If the demand for the company is higher the company can issue more shares and generate income from that. Likewise there are more additional beneficial features available for this PLC companies.
As I mentioned earlier the main objective of initial public offering is collecting money for company, so the company who do IPO do the publicity and the plan is to sell every share which offers to IPO.
Sometimes the financial health of the company who do initial public offering not so good so it is necessary to every investor who involve in to IPO get a good knowledge regarding the history and the performance of the company.
Normally companies provide document related to their companies financial details and the details of their companies with initial public offering application.
If you do not have a proper understand this companies performance, you must get assist from your broker and they will give you better investment advice that this company is suitable for invest or not.
We are plan to focused more on IPOS s and other types primary market in our future articles for more information on please check our “Initial Public Offer (IPO)” category for more information.