Where should you invest- IPO or NCD IPO?
Companies have several avenues through which they can raise funds. Some primary ways are initial public offering (IPO) and non-convertible debentures (NCD)- IPO. What is an IPO? A company announces an IPO when it decides to go public and raise funds through the sale of shares and securities to the public for the first time. In other words, the IPO process of an unlisted company going public and getting listed on stock exchanges. This initial process happens in the primary market. Following this, the company takes the status of a publicly-traded company with shares available for trading in the open market. Similarly, fixed income instruments like NCDs (non-corporate deposits), bonds, and others also have an IPO. What is an NCD IPO ? An NCD is a fixed-income instrument used by highly rated companies to raise funds from the public for a fixed tenure. It involves an interest rate and the return of the principal invested on the NCD’s maturity. It is called non-convertible as NCDs can...