What is a Roadshow in an IPO?

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A roadshow in an initial public offering (IPO) is extremely important for the issuing company to explain to the investors why they should invest in that IPO. During the roadshows, companies provide valuable information, which can help people decide whether to invest in an IPO.

In the context of an initial public offering (IPO), a roadshow refers to all the meetings and presentations conducted by the management of the private company that is coming out with an IPO to ensure that the IPO is successful.

In such meetings, the executives of a company interact with prospective investors and explain to them why investing in the IPO makes sense. Ensuring that an IPO is successful is often a daunting task. Often, companies conduct several meetings in major cities to spread the word about an IPO so that investors subscribe to the IPO when it hits the market.

If you have opened a demat account, you should check out how a company conducts an IPO roadshow. That will be a great learning opportunity for you to understand what goes behind an IPO.

Why is a Roadshow Extremely Important for an IPO?

In an IPOs (Initial Public Offering), a private company offers new shares to the public for the first time. Therefore, that company needs to ensure that its IPO is successful. For this purpose, they conduct meetings across all major financial centres of a country where they expect to interact with the investors.

For example, in India, it is common for a company coming out with an IPO to conduct a roadshow in Mumbai, Delhi, Kolkata, Chennai, Bengaluru, and Hyderabad, as these are the biggest cities in the country.

However, before organising a roadshow, a company has to do something very important. It has to select an underwriter whose job is to supervise the process of the IPO and conduct due diligence.

What is the Role of an Underwriter in an IPO?

An underwriter’s role is typically performed by an investment bank or a financial institution. An underwriter works with an IPO-issuing company and helps it meet all the regulations set by the Securities and Exchange Board of India (SEBI).

That said, underwriters have other important responsibilities as well. For example, an underwriter is responsible for analysing the risks of an IPO. The biggest risk is that an IPO will not be adequately subscribed, which may affect an issuing company’s reputation. An underwriter has to examine this risk before an IPO hits the exchange.

In some cases, an underwriter even provides the issuing company with a guarantee that a certain number of minimum shares will be sold through an IPO. However, such a guarantee is not given in all IPOs.

What exactly happens During a Company’s IPO roadshows?

After an underwriter has helped an issuing company examine an IPO’s risk and meet all the regulations, a roadshow can be kicked off.

An issuing company and an underwriter together decide which cities to visit as a part of the roadshow, what kind of investors to target, and what sort of information to present during the roadshow. In short, they do their best to sell an IPO to the public because that is their main objective.

The presentations during a roadshow in an IPO talk about a company’s background, its owner and management, and its business model.

An issuing company also explains what it intends to do with the proceeds of an IPO. An IPO helps a company raise finance from the public, which in turn is keen to know how that company will deploy those funds. A roadshow is a great opportunity to throw light on this aspect.

Often companies also talk about their projected performance. In other words, they explain to the investors how much they expect their net sales and net profit to grow over the next few years.


As a retail investor, you should utilize the information provided by a company during its roadshow to make a sound decision regarding your IPO investments. If you are keen to invest in an IPO, the first thing you should do is read its Draft Red Herring Prospectus (DRHP) thoroughly because this document discusses the company’s business model and financials.

The past financials reflect the correct picture of a company’s financials. So, you should go through that. When it comes to projections, you should compare the projected growth rate of an issuing company with that of its nearest rivals. This will tell you whether the projections are realistic or not.

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.

This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

For All Disclaimers Click Here: https://bit.ly/3Tcsfuc

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