Conversion of Pvt Ltd co to Public ltd company

Expectations of cheap and easy Financeleads Companies to embark on IPO route. Going Private to Public may benefit or inhibit. Process requires masses of actions. Allow us to examine how you stand and ease your path forward.

  • Conducting Evaluation
  • Customised Recommendations re: your case
  • Options & Alternatives
  • Providing Contacts forthe IPO Process

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Whereas the shares of any Private Limited Company is not traded on the market, converting to a Public Limitedstatus after an Initial Public Offering (IPO) allows for its shares to be now traded on the bourses. This conversion is known as “going public”. And once the process is complete the “public” version becomes a publicly-traded and owned entity.
In the India of recent times, the shares offered to prospective buyers are at multiples of their “face” value. Dividends, on the other hand are based on face value. Thus the actual cost of capital for the capital collected from buyers is a fraction of what it would be through borrowing. Many private players find this mouthwatering.

They feel it kills two birds with one stone, for, the extra capital raised not only allows them funding for accelerated growth but comes at a much lower price.
And Venture Capitalists who may have invested in the company when it was private also find it mouthwatering. It allows them to exit with a sure and substantial profit.

Other Benefits that accompany this are increased prestige and ability to make more acquisitions.

However, the downside is: Going public diversifies ownership, imposes restrictions on management, and to greater regulation.It may increase costs and forces disclosures to the public. It certainly makes the former business owners lose control of how they ran the company.

Listing a Company

  • The IPO process begins with contacting an investment bank and making certain decisions, such as the number and price of the shares that will be issued. Investment banks become underwriters i.e. guarantee that they will pick up whatever shares remain unsold and assuming legal responsibility for them. In the recent past they have not had to perform on such guarantees.

  • The goal of the underwriter, however, is to sell the shares to the public for more than what was paid to the original owners of the company.
  • The goal of the underwriter, however, is to sell the shares to the public for more than what was paid to the original owners of the company..

Requirements for Listing

  • The primary requirements that underwriters want is for the company to have demonstrated predictable and consistent revenue and mature enough to be able to make accurate forecasts about quarterly and future earnings, and give out growth projections that do not seem overly optimistic -or at least be able to justify why.

  • It always helps if the company is a market leader; if its audit process is strong; and, if its debt-equity ratio is low.

Frequently Asked Questions (FAQ)


Looking at the events of 2018 (period unaffected by COVID), the Economic Times reported: some 69 companies raised Rs.27,900crores through IPOs. 47 of them dropped significantly in share value eroding Rs.4,700crores of wealth. This does not fully represent the real picture because large top performers such as Bandhan Bank and HDFC Mutual Fund made up for a lot of it.


The Value of the company! First, the track record of your company; next,the business plan that you present must have conviction for investors. Then the quality of leadership which is one of the biggest factors investors examine, even beyond the financials. There was a time when people bought shares purely on the advice of pundits – but times are changing. You and your management team must be self-aware enough to assess this realistically. If you do not have stable footing or know what direction you want to go, the public markets are likely to get to know in which case you will not get a good price. Even if you manage to overcome this, the prices of shares for the publicly listed entity will begin to drop; eroding value for you. However, an IPO does give you the opportunity to exit the company, if that was a part of your plans. If so, the fall in prices could be quite dramatic and affect you before you have fully exited.


After the IPO, the company may be left with surplus funds. Although these may be parked in bonds or banks, this fetches low returns. If as a private player you were highly profitable, giving great dividends to shareholders, such surplus will drag your profitability downimpacting your personal earnings. So you need to be clear about Plan A and the amount you need to begin with. You should also have prepared a Plan B if “A” does not work out. Study scenarios and ask yourself: is the loss of control (and possible loss of earnings) worth it?


Cost of capital has been steadily declining in India. Unless banks have stopped lending analysis can indicate alternatives. These may be slightly costlier or bit slower, but control will remain with you. Seek the help of dedicated professionals.

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