Initial public offering (IPO)

An initial public offering (IPO) is the process of launching a firm on to the stock exchange for the first time by inviting the general public and financial institutions to subscribe for shares – effectively selling them part of the firm. IPOs are also referred to as ‘flotations’ and the process as ‘floating’ or ‘going public’.

IPOs generally involve young firms trying to raise capital to expand or realise returns on their founder’s investments, but well-established firms also float. Firms that are loath to float – as it involves giving up some autonomy and sharing sensitive information with the market – tend to use the debt market (bonds) for finance instead.

Watch Tim Bennett’s video tutorial: A lesson from Facebook – avoid IPOs.

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27 February 1900: The Labour Party is launched

Responding to the need for a single political party to represent the trade unions, the Labour Party was formed on this day in 1900, led by MP Keir Hardie.