EQUITY SHARES / INVESTMENT

EQUITY SHARES

An equity investment generally refers to the buying and holding of shares of stock by individuals and firms in anticipation(return / getting) of income from dividends and capital gains, as the value of the stock rises.
                         Buying or holding Equity shares means acquistion of ownership and participation in a private company.

Issuance of Shares 

• UNDER-WRITING :- Underwriting is an agreement entered into by a company with a financial agency, in order to ensure that the public will subscribe for the entire issue of shares or debentures made by the company.

                       The financial agency is known as underwriter and it agrees to buy that part of the company issues which are not subscribed by public in consideration of a specified underwriting commission.

                   Several benefits of underwriting are:-

1. It relieves the company of the risk and uncertainty of marketing the securities.
2. It helps in financing of new enterprises.
3. It builds up investor,s confidence in the issue of securities.

• Intial Public Offering(IPO) :- When an unlisted company issue its shares directly to the public for first times it is known as IPO.

• Further Public Offering(FPO) :- When a listed company issue its shares, after IPO, directly to the public is known as further or follows on public offering.(FPO).

• Right issue :- In this issuance, a right is given to IPO or Existing share holders to buy FPO or further shares of a company in a particular ratio by higher priority than new investors.  

                   This route is best suited for organisations who would like to raise capital without diluting the stake of its existing shareholders.