An initial public offering, or IPO, is the first sale of stock by a company to the public.
A company can raise money by issuing either debt or equity. If the company has never issued
equity to the public, it's known as an IPO.
An IPO is also sometimes known as "going public." Technically, an IPO is the offering to
sell but virtually all IPOs result in all the stock offered being sold. IPOs are generally
managed by companies that specialize in handling IPOs and have experience in determining
what the likely IPO offering price should be. If the IPO manager determines that the stock
will not sell at an offering price that is acceptable to the company, the application for
an IPO is usually withdrawn until a better time. As soon as all shares of an IPO have been
sold, the stock is now tradable through stock exchanges or specialists that trade in the
stock and the stock price may go up or down.
Basis of Allotment or Basis of Allocation is a document publishes by registrar of an IPO to
stock exchanges and IPO investors. This document provides information about final price fixed
for an IPO, issue subscription (bidding) information or demand of an IPO and share allocation
ratio.