What is an IPO?

IPO, in the investment world, stands for “Initial Public Offering” and represents a significant milestone for a private company as it marks the first time it offers its shares to the public.

By going public, the company allows investors to own part of the company (usually a minimum of 25% of the shareholding if listed on the Official Market or 10% if listed on the Development Enterprise Market of the Stock Exchange of Mauritius) in exchange for capital which can be used for various purposes, such as:

• acquisitions, expansions, debt repayment (commonly referred to as “primary offerings” or “offer for subscription” whereby new money is raised and new shares are issued); or

• to allow initial investors to exit partially or totally (also referred to “secondary offerings” or “offer for sale” whereby existing shares are sold and the money raised goes to the selling shareholders).
  

IPOs usually attract considerable interest from investors as it provides an opportunity to participate in the growth potential of a company which was previously owned by a small number of private investors such as the founders, families, friends and/or private equity funds.

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