IPO

In the 1600s, the Dutch East India company employed hundreds of ships to trade gold,porcelain,spices and silks around the globe. But running these operations wasn't cheap. So in order to raise funds, they started selling shares of profits to private citizens who could invest money. In this by default way this became the first company to launch IPO or initial public offering.

Well IPO in simple terms is a process by which private company first issues and sells its shares to the public in order to raise funds from the public investors. This process transformed the private into a public company. The investors who purchase these become equity shareholders or partial owners of the company. It helps the company in expansion and diversification and boosts its growth to the next level. It makes capital accessible and in turn puts the company in front of public scrutiny which results in greater transparency and credibility. It also makes it less liable towards debts which are more riskier.

So IPO is basically issued in the Primary Market which is a place where new securities like share bonds etc are issued for the first time or in simple terms it's a place where securities are created. Here the exchange of security occurs between company or issuer and investor. While in the Secondary market also known as the stock exchange, the previously issued securities are exchanged between investors freely with no role of company or issuer. It helps in providing liquidity to the original investors and provides greater return on original investments. 

The public which invests in IPO receives dividends from the company which is like a gift to shareholders for investing in their company. But the rate of dividend totally depends upon the policy and performance of the company. If the company has liberal dividend policy and greater financial growth and huge profits, then it will generate greater dividend or vice versa.

In short, IPO allows the company to raise capital which helps in speedy growth and expansion which in turn leads to generation of greater employment opportunities and raises production and consumption of goods and services which eventually leads to economic growth of the country. IPOs also allows households to deploy their savings in tactful manner by investing in fundamentally strong companies of their choice either to make to quick listing gains or create a long term portfolio.As Robert G. Allen said "How many millionaires do you know who became rich by investing in savings accounts? I rest my case."

Well it all comes with huge risk and fear of also losing money in a quicker way. So investing is like setting sail in the sea- calm waters are never a promise but without venturing out the shore of success remains too distant to reach as "Risk hai tabhi Ishq hai".