what does actually takes place while deciding the price of an IPO?



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explain the process in little bit more elaboration.

1 Answer(s)


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1. Investment Bankers will use valuation methods like DCF, Comparables etc to arrive at the value of the company. They will divide that by the number of shares to get the per share price. This is mostly represented as a price range example Rs. 100-120 per share.

2. Then the investment bankers along with the companys management will visit investors and offer this price range.

3. Investors will apply for share allotment by specifying what price they are willing to pay inside that price range.

4. After getting all the application, based on the demand, the bankers and the company management will decide at what price to price the share and the list the company on the exchange.

5. After that the price is determined by the stock market.

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