What is IPO?

Initial Public Offering (IPO) is also known as a stock market launch, is the first sale of shares by a private corporation to the individual and institutional investors. Through this process, a private company becomes or transforms into a public company.

By launching a public share issuance IPO, a company raises capitals through public investors and can use them for their debt repayment, acquisitions, etc. After the launch of the IPO, the share is traded freely in the open stock market, which is also known as free float.

The first modern IPO was launched in March 1602 by the Dutch East India Company.

Why in news?

The Saudi Arabian oil company, Saudi Aramco has announced the largest stock debut or the World’s biggest IPO in history.

Saudi Aramco will be raising USD 25.6 billion by selling its shares, surpassing the record of the Chinese multinational conglomerate, Alibaba, which raised USD 25 billion in 2014.

The IPO would value Saudi Aramco at around USD 1.7 trillion, making them the world’s most valuable publicly-traded company.