IPO Grading

The main objective of issuance of Initial Public Offering (IPO) is to invest the corpus so accumulated, for either establishing of a new company or expansion of an existing private company. The shares held by such financer or investors give them the rights of the company and to its future profits, which are categorically mentioned in the offer document.

The process of underwriting determines the issue size and type, offer price and best time of introduction into the market is called "underwriting". The underwriting is generally done by the investment bankers. These underwriting firms or investment bankers are allotted some specified numbers of shares to sell to the general investor before the share is being traded on an exchange.

IPO Grading also called Rating is a process by which the back ground of an IPO issuing company is verified. The main objective of such verification of track record is to provide higher security to the money of the investor. The IPO Grading process does not involve any "pricing suggestion" related to buying or selling price. The rating agency only does the IPO Grading on the previous track record of the company which has issued such IPO. The IPO Grading process mainly checks-for any negative factor in the track record of the IPO issuing company. Further, IPO Grading also arrests scrupulous or fictitious company from entering in to the market and run-away with investor's money.