Initial public offering facts for kids
An initial public offering (also called an IPO or stock market launch) is when a company sells its shares to the public for the very first time. Think of it like a company inviting everyone to own a small piece of it. Before an IPO, a company is usually owned by a small group of people, like its founders or a few investors. After an IPO, anyone can buy its shares on a stock market.
Companies do an IPO to raise a lot of money. They use this money to grow their business, build new factories, or develop new products. When you buy shares in an IPO, you become a part-owner of the company. The company does not have to pay this money back to you. Instead, you hope the company does well, and the value of your shares goes up!
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What is an IPO?
An IPO is a special way for a private company to become a public company. This means its shares can be bought and sold by anyone on a stock exchange. It's a big step for any company, showing it's ready for more growth and public attention.
Why Companies Do IPOs
Companies choose to go public for several reasons:
- Raise Money: The main reason is to get a lot of money quickly. This cash helps them expand, invest in new projects, or pay off debts.
- Increase Visibility: Being a public company makes it more famous and trusted. This can help it attract new customers and partners.
- Reward Early Investors: People who invested in the company when it was small can sell their shares in the IPO. This allows them to make a profit from their early support.
Largest IPOs in History
Some IPOs have raised huge amounts of money, making headlines around the world. These are often for very large and well-known companies.
Top Global IPOs by Money Raised
For many years, the United States was the biggest place for IPOs. However, in recent times, China has become a leader in raising money through IPOs. Here are some of the biggest IPOs ever:
- Agricultural Bank of China raised US$22.1 billion in 2010.
- Industrial and Commercial Bank of China raised US$21.9 billion in 2006.
- American International Assurance raised US$20.5 billion in 2010.
- Visa Inc. raised US$19.7 billion in 2008.
- General Motors raised US$18.15 billion in 2010.
- Facebook, Inc. raised US$16 billion in 2012.
The IPO of Alibaba was once the largest. More recently, in 2019, ARAMCO from Saudi Arabia became the biggest, raising about US$25.6 billion.
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