Initial Public Offerings (IPOs) IPOs are a process by which
companies can raise capital by selling shares in the company on
a stock market. This step means that the public can for the
first time buy a stake in the company. The process is used by
smaller private companies which need capital to expand, or state
companies which want to privatise or tap into the capital
markets. Companies do not necessarily choose to list in their
domestic market. Indeed many choose to list in major financial
centres to provide greater access to investors. The listing
company will appoint bookrunners – investment banks who
underwrite and manage the process of initial bids for the
shares, and seek to gain the best price for them. Companies will
issue a prospectus providing information to potential investors
which will be circulated by the bookrunner and approved by the
stock exchange as meeting the listing requirements. This will
include typically include financial information, business
description and risk factors.