What is an Initial Public Offering (IPO)??? - Navigasi Berita a -->
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What is an Initial Public Offering (IPO)???

Navigasi - IPO is an Initial Public Offering, namely an initial public offering of shares from a company to public investors, this initial public offering or IPO is usually carried out by companies through the Stock Exchange. In Indonesia it is usually done on the Stock Exchange. 

What is  Initial Public Offering (IPO)???

What is  Initial Public Offering (IPO)???

Initial Public Offering (IPO) itself is carried out by issuers based on urgent capital needs that must be carried out in order to maintain the business they have.

One of the supporting factors for the continuity of a business entity or company is the availability of funds. The absence of funds in a company can cause the death of a business or the cause of the company's lack of funds, companies tend to be stagnant and unable to expand, therefore a healthy company will of course always look for ways to obtain funding for the continuity of the company's business.

In general, funds can be obtained from two sources, namely sources of funds originating from the company's internal (profit) and non-internal or from outside the go public company (sales of shares), and one source of non-internal funds that can be obtained by a business entity or company other than debt to the bank is by selling shares to the public in the capital market. Now for companies that have just sold their shares in the capital market, this is called an IPO.

IPO Benefits

According to Jogiyanto (2015) There are five main benefits for companies conducting IPOs. The explanation is as follows:

The first benefit is obtaining new funding sources, obtaining new funding sources is useful for increasing working capital and for business expansion.

The second benefit is to provide a competitive advantage for business development, this competitive advantage provides an opportunity for companies to invite partners such as suppliers and buyers to become shareholders so that the quality and loyalty of business relationships will be higher because the partners will commit to assisting the development of the company. Companies are also required to improve the quality of their operational work because of the demands of many parties. This will be a race for the company and employees to provide the best results to their stakeholders.

The third benefit is the ability to conduct mergers or acquisitions of other companies with financing through the issuance of new shares. Merger or acquisition is one way to accelerate the development of the company's business scale. This acquisition was carried out through the issuance of new shares as a means of financing the acquisition.

The fourth benefit is an increase in the ability to go concern, improve the company's image. Going concern is the ability to survive in any condition, including in conditions that can result in the bankruptcy of the company. By becoming a public company, the company is able to better maintain its survival. This happens because when a company becomes a public company, the company's restructuring process will be easier if there is a case of failure to pay debts to third parties which results in the need for a certain restructuring.

The fifth benefit is increasing the value of the company. By conducting an IPO, the company will become the attention of the media and the financial community. This is a distinct advantage for the company because it gets free publications to improve its image.