IPO Issue Structure Explained

In a fresh issue, the company creates and sells new shares. The company receives the proceeds, after issue expenses, for the stated objects such as capex, debt repayment, working capital, acquisitions or general corporate purposes. Existing shareholders are diluted.

In an IPO OFS, existing shareholders sell some of their shares to the public. The selling shareholders receive the proceeds attributable to their shares; the company does not receive that portion of the money.

No. Early investors may need liquidity, promoters may diversify, or regulations may require a wider public float. The relevant questions are who is selling, how much they retain, their acquisition cost, and whether the company itself needs growth capital.

Dilution is the reduction in an existing shareholder's percentage ownership when new shares are issued. Investors should examine post-issue share count, promoter holding and earnings per share rather than relying only on pre-issue figures.

These are the disclosed uses for fresh-issue proceeds. Specific, measurable uses such as identified capex or debt repayment are easier to monitor than broad allocations to general corporate purposes or unidentified acquisitions.

A pre-IPO placement is a share issuance or sale completed before the public issue, often to institutional or strategic investors. Its price, timing, lock-in and effect on the final fresh issue should be reviewed in the offer document.

Anchor investors are eligible institutional investors allotted shares before the public issue opens under the applicable framework. Their participation provides a demand signal but does not guarantee listing performance or long-term business quality.

Some IPOs reserve shares for eligible employees or shareholders of a specified parent company. Eligibility dates, discounts, application limits and whether bids can also be made in another category are defined in the offer document.