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Is it true that initial public offering (IPO) is the purpose of raising the equity via...

Is it true that initial public offering (IPO) is the purpose of raising the equity via qualified institutional investors?

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Answer #1

False, it is not true completely that IPO is the process of raising the equity via qualified institutional investors because it includes retail investors too including the general public. IPO is the process by which the owners in a business decided to raise more capital for a firm and the general public and the institutional investors also become their shareholders by buying their shares. Institutional investors include Mutual funds, hedge funds, endowment funds, pension funds etc. This process is generally done with investment banks who also provide underwriting services.

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