Initial public offering

The first sale of a company's shares to the public, after which they are listed and traded.

An Indian issue can combine a fresh issue, where money goes to the company, and an offer for sale, where existing holders sell and the company receives nothing. The split is disclosed and it changes what the transaction is for.

Lock-in rules limit early selling. Promoter shares are locked for a period after listing and other pre-listing shares for a shorter one, with 18 months and 6 months being the figures in common use. Those expiry dates are predictable supply.

Read the objects of the fresh issue before anything else in the document.

Three documents matter and they arrive in order: the draft offer document, filed months ahead and the most useful; the red herring, carrying the price band; and the prospectus, carrying the final price. Almost all the analysis can be done from the first one, well before the marketing starts.