Ipo : A Business Cycle Essay

2) Liquidity is better and this means they are being proactive and managing their money.

As the company can maintain the best quality and service to customer, so the company has more options of value creation

Abstract: The paper examines the IPO of Bharti Infratel Ltd., one of the top ten IPOs by amount of capital raised in Indian history. The IPO is also interesting to study as Bharti Infratel is one of the first telecom tower and infrastructure provider companies in India and GTL Ltd. is the only other Indian company in this sector to have gone public till date. The scope of the paper is to understand the rationale behind raising capital with respect to internal factors as well as industry specific factors. Further, a critical analysis has been conducted on the IPO activity

* Investors are more likely to invest in this type of entity due to its protection, and easy acquisition of the company stocks.

5. An active secondary market for debt or equity securities makes raising new capital less expensive for firms.

Corporate Bonds are the financial instruments through which corporates can raise capital by borrowing money from investors. In return company pays interest on the principal. And the principal is returned to the lender after pre-determine period also called as maturity. It is more cost effective to raise money through bonds than through equity. Even if the company is going through a difficult financial crisis, it still has a legal commitment to pay interest and principal to lenders. Bond investors have priority over shareholders on the company’s properties in case of bankruptcy. Companies issue bonds for a variety of purposes, including buying new assets, investing in research and development, refinancing debt, or financing mergers and acquisitions.

IPO is a part of equity financing. Equity financing is when a company decides to give up ownership in the company to raise funds. This is usually done by selling

An initial public offering (IPO) is defined as the first offering of shares by a private company to the public. A share is one of a finite number of equal portions of the capital of a company that entitles the shareholder to a proportion of distributed, non-reinvested profits known as dividends, and to a portion of the value of the company in case of liquidation. Shares can be either voting or non-voting, meaning that the shareholder may have the right to vote on the board of directors and thus the corporate policy (Draho, 2004).

* The market is extremely unpredictable and an unsuccessful IPO can result in a great loss of time as well as money for the company

In order to finance through debt, the companies will get the opportunities or may allows you to pay for new buildings, equipment and other some other crucial assets used to cultivate your business before you get or earn the essential finances or funds. However, this can be a huge way to chase an aggressive growth approach, this occurs particularly; if a company has access to get lower interest rates. Intimately related is the benefit of paying off your debt in installments over a period of time. Relative to equity financing, you also benefit by not relinquishing any ownership or control of the business (Bharath, Sunder & Sunder,

Issuing new shares and moving to retire outstanding debt reduces leverage reduces the degree of exposure and magnification that the company will experience due to cash flow and other economic fluctuations-by reducing fixed costs and spreading the exposure around to a wider pool of investors (Bierman, 2003). This would be most advantageous during a year when it is expected that there will be a tightening of

* What is an Initial Public Offering and why is it such a big deal?

     The New York Stock Exchange traces its origin back 200 years. Centuries of growth and innovation the NYSE remains the world’s foremost securities marketplace. Over the years its commitment to investors has been unwavering and its persistent application of the latest technology has allowed it to maintain a level of market quality and service that is unparalleled. The NYSE has grown to become the global marketplace of today.

Also, the stock market tends to react negatively to announcements of new common stock offerings, whereas debt security announcement tend to have little impact on stock prices. As a additional external financing is needed, the firm will work down the pecking order – from safe to more risky debt, then possibly to convertible debt, and finally to common equity as a last resort.

An Initial Public Offering (IPO) is the first time that the security of a company is offered to the public. This process of equity offering is followed by the companies under the rules and regulations or the guidelines prescribed by Securities Exchange Board of India (SEBI).IPO is the major source of capital for firm to raise their capital for their business Replacement, Expansion, Modernization, Diversification or the host of any other purpose. The pricing of IPOs is one of the most puzzling phenomena in finance. It is tough to predict its prices on listing day of trading in Capital market. It is totally depends upon the Market trend, Issue Price, Issue time, Issue age, Issue size, reputation of Book Running Lead Managers (BRLM) , No. of