It stands for initial public offering; a process by which a company’s security is offered for sale to investors for the first time. A private (privately held) company intending to g public can raise capital by issuing securities to the public through the primary market. In an initial public offering (IPO), it is the company’s shares, not the shareholders’ shares, which are sold to investors, and the sale proceeds go to the company to finance its future growth. When a company plans to go public, it first has to select one or more investment banks as underwriter or co-underwriters for the offering.

The initial public offering is also known as a new issue.