Initial Public Offering (IPO), also referred to simply as a "public offering", is when a company issues common stock or shares to the public for the first time. They are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded.

In an initial public offering, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market.

Initial public offerings can be a risky investment. For the individual investor, it is tough to predict what the stock will do on its initial day of trading and in the near future because there is often little historical data with which to analyze the company. Also, most IPOs are of companies going through a transitory growth period, which are subject to additional uncertainty regarding their future values.

There can be lots of reasons why companies offer shares to the public:
- the directors want to raise new capital for the company
- the directors want to widen the shareholder base of the company
- the shareholders want to have a liquid market in which to trade their shares
- the directors want to be able to use 'paper' to make acquisitions
- the directors want the publicity that a public listing brings

One of the advantages of buying shares in initial public offering is that they do not attract Stamp Duty and since you can buy direct from the issuing company you can avoid broker's commission.