Why You need to invest in IPO?

What is IPO?

 Initial public offering (IPO) is the process by which a private company can go public by sale of its stocks to general public. It could be a new, young company or an old company which decides to be listed on an stock exchange (NEPSE) and hence go public.

Companies raise equity capital with the help of an IPO by issuing new shares to the public or the existing shareholders can sell their shares to the public without raising any fresh capital.

The company which offers its shares, known as an 'issuer', does so with the help of investment banks. After IPO, the company's shares are traded in an open market. Those shares can be further sold by investors through secondary market trading.

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Why You need to invest in IPO?

As we all know the craze for IPO have risen drastically these days as per the latest update there are more than 35 lakh Demat accounts opened. There were days when some IPO were undersubscribed and extended for some more days. Today the scenario has changed, the IPO becomes oversubscribed the day the IPO comes to public. There are various factors contributing to this stage.

1.) People have been more aware to this term IPO as before.

2.) The facility to apply IPO from your home or fingertips.

3.) The country going into Lockdown and people being left with limited investing opportunities.

We all know there are two basic markets for trading shares in Nepal, primary and secondary market. Secondary market poses a lot of threat in investment as it's not suggested to enter the market without a proper study and a plan. Whereas Primary market where Initial Public Offering (IPO) is considered is much more safer side and the recent day of return from this market is attracting a lot of people.

Upto how much the price of the IPO of company can reach?

Well, there is no definite answer to this question and there were cases where it fell below the par value i.e Rs. 100. But the recent example shows otherwise. It's not only safe in investing these IPO, the returns from it have been magnificent.

The shares of Mahila Laghu bitta Bittiya Sanstha Limited (MLBSL) traded on 4,573 as on Baisakh 22, 2078. Those who had been lucky and alloted with this company's share is on profit of 46,000 (Fourty Six Thousand ) as they only invested 1000 rupees for the initial IPO amount.

Similaryly, Sanima General Insurance(SGI) rose upto 950, Mountain Energy Nepal (MEN)upto (884). Nepal Infrastructure Development Bank (NIFRA) where each investor were alloted a minimum of 50 shares per person had reached to 720 where the investor could book almost 36000 profit within a short period.

Liberty Energy Company (LEC) 350 is considered to be the IPO with the lowest price since the Dashain-Tihar.

Why is the IPO growing in such rate?

As mentioned earlier Share market is gaining a lot of attraction from different sectors of investors. The ongoing Lockdown has fueled the rise of price as well. 



Also Read:

Everything You need to know about Mutual Funds in Nepal


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