Allotment Definition, Reasons for Raising Shares, IPOs

Allotment Definition

Allotment is the process of allocating shares of a company to investors in an initial public offering (IPO). The allotment process is typically conducted by the underwriter, who is the investment bank that helps the company go public. The underwriter will determine the number of shares to be allocated to each investor based on a number of factors, including the investor's demand for shares, the size of the offering, and the prevailing market conditions.

Reasons for Raising Shares

There are a number of reasons why a company might choose to raise shares through an IPO. Some of the most common reasons include:

• To raise capital for expansion.
• To fund a new acquisition.
• To reduce debt.
• To improve the company's liquidity.
• To provide employees with an opportunity to own shares in the company.

IPOs

An IPO is the first time that a company's shares are offered for sale to the public. IPOs are typically conducted by companies that are relatively young and have not yet been profitable. The goal of an IPO is to raise capital for the company and to provide investors with an opportunity to own shares in the company.

The IPO process can be complex and time-consuming. It typically involves a number of steps, including:

• Preparing the company's financial statements and other documents.
• Selecting an investment bank to act as the underwriter.
• Setting the offering price for the shares.
• Marketing the offering to potential investors.
• Closing the offering and listing the shares on a stock exchange.

The IPO process can be a successful way for companies to raise capital and to provide investors with an opportunity to own shares in the company. However, it is important to note that IPOs are not without risk. Investors should carefully consider the risks involved before investing in an IPO.