How an IPO actually works, step by step
From offer document to the day the shares start trading — in the order it really happens.
The company decides to sell
A private company wants money to expand without borrowing it. So it offers shares to the public for the first time. That first sale is the Initial Public Offering.
The regulator has to approve it. In Nigeria that is the Securities and Exchange Commission; every serious market has its equivalent.
The offer document lands
This is the prospectus: the price, how many shares, how the money will be used, who runs the company, and what could go wrong. The risks section is the part most people skip and the part worth reading twice.
Every legitimate channel for buying is named in that document. Anything not named in it is not a legitimate channel.
The window opens
For a fixed stretch of days, anyone eligible can apply. You say how many shares you want and you pay. The window closes on a stated date and that is that.
If more people apply than there are shares, the offer is oversubscribed and allocations get scaled back. You may get fewer shares than you asked for, with the difference refunded.
Then it lists
Weeks after the window closes, the shares start trading on the exchange. From that morning, the price is set by whoever is buying and selling, not by the company.
This is when early buyers find out what the market really thinks. It can open above the offer price. It can open below it.
The one thing to remember
Approval, offer document, subscription window, allocation, listing. Skip a step and somebody is selling you something else.
