IPO(Initial Public Offering) allows the company to raise capital from public investors. The transition from a private to a public company can be an important time for private investors to fully realize gains from their investment because it typically includes a share premium for current private investors.
The company who wants to price an issue goes to the investment banking firm.
Then the firm and the company decides the price band considering the amount of capital the company wants to raise. The company going public decides a fixed price at which the shares are then offered to the investors. The investors know the share price before the company goes public.be part of this IPO, the investor must pay the full share price when making the application itself.
The price is then determined on the basis of demand of that share.
The IPO is released within the market and a hospitable bid within the worth band for a minimum for 3 days and maximum 10 days. Within the given period of time the investor can bid for the quantity and price he wants to buy.
The Listing price
The listing price is the price at which the opening trade will take place at the share market. Strong demand will lead to a great stock price. Price is based on the basis of demand and supply of the share. A company that is planning an IPO appoints lead managers to decide on a price at which the shares should be issued. Either the company with lead managers decide or the price is arrived through the process of book building. If demand is more than supply the listing price will be more than the difficulty price and therefore the investors who sell are going to benefit and if the availability is quite demand the listing price will be but the difficulty price of the share.