An Initial Public Offering is the US equivalent of flotation, and is the first sale of equity in a private company in the form of shares (know as stocks in the US) to the public in order to raise capital to finance growth.
Stocks
In the UK, stocks are fixed-interest securities such as corporate bonds and government gilts. In the US, stock is the most widely used term for shares; a diminutive of the term “common stock”.
Flotation
Flotation involves a company selling a percentage of itself in the form of shares on a regulated exchange, such as the London Stock Exchange. Prior to flotation, the company is independently audited and valued and shares offered for sale at a price determined by the company’s value. After flotation, the shares are traded on the exchange for what the market deems they are worth. Shares are bought by other financial institutions and private investors.
