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Initial public offering (IPO), also referred to simply as a "public offering", is the first sale of stock by a private company to the public. IPO is a way for a company to raise money from investors for its future projects and get listed to Stock Exchange.
From an investor point of view, IPO gives a chance to buy stocks of a company, directly from the company at the price of their choice (In book build IPO''''s). Although an IPO offers more control over the price at which the investor is willing to buy the stock it is no less risky than buying a stock in the market.
From a company prospective, the single most important use of an IPO is the provision of funds. IPO''''s provide capital for the company’s future growth or for paying its previous borrowings and allows the company’s stock to be traded publicly in the Stock Market.

IPO
Companies need fund to finance their new projects, upgrading of infrastructure, acquisition, future growth plans or to pay off previous borrowings. Borrowing the money from a financial institution compels the company to pay interest on those borrowings. On the other hand when a company issues an IPO or an Initial Public Offering, the company offers a fixed numbers of its shares to be held by the public and to be traded publicly.
The investors in an IPO book their shares by offering the pay the company the issue price or the price of each share. The money paid by investors for the newly-issued shares goes directly to the company (in contrast to a later trade of shares on the exchange, where the money passes between investors). An IPO, therefore, allows a company to tap a pool of investors to provide it with large volumes of capital for future growth. The company is never required to repay the capital, but instead the new shareholders have a right to future profits distributed by the company.

Types of IPO
Initial Public Offering can be made through the fixed price method, book building method or a combination of both.
Book Building Issue:
In a book building issue during the period for which the bid is open, bids are collected from investors at various prices, which are above or equal to the floor price. The offer/issue price is then determined after the bid closing date based on certain evaluation criteria. Book Building process helps the company achieve appropriate price and discover the demand for the issue.
Fixed Price Method:
Unlike the book building process in a fixed price process the price at which the stock has been offered is known in advance to the investor

FAQs

NSE CM and Derivatives Segment SEBI Regn. INB230638639 & INF230638639 , NSE Currency Derivatives Segment SEBI Regn. INE230638639 , BSE CM and Derivatives Segment SEBI Regn. INB010638634 & INF010638634 , BSE Currency Derivatives Segment SEBI Regn. INE010638634 , MCX-SX Currency Derivatives Segment SEBI Regn. INE260638639 , PMS SEBI Regn. INP000001371 , CDSL DP SEBI Regn. IN-DP-CDSL-251-2004 , NSDL DP SEBI Regn. IN-DP-NSDL-272-2007 , Commodities Trading* - MCX Commodities segment FMC Regn. MCX/TCM/CORP/0741 & MCX Code No.10585 , NCDEX Commodities segment FMC Regn. NCDEX/TCM/CORP/0501 & NCDEX CMID: 00011 (* through Networth Commodities & Investments Limited.) , Merchant Banker Regn. INM000011013