In an initial public offering, a company sells shares to a wide range of investors for the first time. Funds may go to the company if newly issued shares are offered, or to existing owners if existing packages are sold — these are fundamentally different situations, and the issue documents show which one applies.
Preparation includes financial audit, alignment of corporate governance with public requirements, preparation of an offering prospectus, and work with the placement organizer. The price is determined based on order collection results, and if demand exceeds supply, orders are partially satisfied.
For an investor, participation in an offering differs from buying on an exchange in two ways. First, the price is not set by the market — it is proposed by the selling party interested in maximizing it. Second, there is no history of public quotes, and valuation must be based solely on disclosed data.
Practical approach: study the offering prospectus rather than promotional materials; understand who receives the money; account for possible partial allocation and lot size when calculating the bid amount. Stock price increases in the first days of trading are not a pattern but one of many possible scenarios.