The price at which shares are offered in the primary market. Characteristics and determination of Issue Price:
- Issue Price of a share is decided based on the valuation of the company.
- If calculating the valuation is tough, then the issue price is calculated based on the comparison with the share price of the same type of listed company.
- Normally issue price is specified as a price band with very little gap between them.
- The final issue price is fixed based on the investors’ response to the IPO and FPO and it has to be within the price band including the upper and lower end prices.
- The investor’s response and the attractiveness of the offer mainly depend on the issue price of the company along with the company fundamentals and current market conditions.
- If the shares are listed below the issue price then it is said to be listed at discount.
If the shares are listed above the issue price then it is said to be at premium.