BUSINESS SPEAK · IPO
IPO: Initial public offering
When a private company first sells shares to the public.
What it means
In an IPO a company lists on a stock exchange and offers shares to anyone. Shares offered × offer price gives the gross amount raised, before bank and legal fees.
Where you’ll meet it
- The amount raised is not the company’s total value — that is all shares × price (market capitalisation).
- New shares dilute existing owners: they own a smaller slice of a bigger company.
Worked example
Scenario: A company offers 10 million new shares at 18 each and pays 7% in fees.
- Gross raise: 10,000,000 × 18 = 180,000,000
- Fees: 180,000,000 × 7% = 12,600,000
- Net: 180,000,000 − 12,600,000 = 167,400,000
Answer: The company raises 180 million gross and keeps about 167.4 million.