What do you understand by Initial Public Offer (IPO) ? State the eligibility requirements for an Initial Public Offer under Regulation 6(1) of SEBI (ICDR) Regulations, 2018.

Answer 4(c) Initial Public Offering (IPO) means an offer of specified securities by an unlisted issuer to the public for subscription and which includes fresh issuance of shares by the company or includes an Offer for Sale (OFS) of specified securities to the public by any existing holder of such securities in an unlisted issuer. In order to qualify as an Initial public offer, the offer of securities must be by an unlisted issuer company and such an issue shall be made to the public and not to the existing shareholders of the unlisted issuer company or to selected group of investors. Eligibility requirements for an Initial Public Offer [Regulation 6(1) of SEBI (ICDR) Regulations, 2018] An issuer shall be eligible to make an IPO only if: the issuer has net tangible assets of at least ₹ 3 Cores on a restated and consolidated basis, in each of the preceding three full years of (12 months each) of which not more than 50% is held in monetary assets; However, if more than 50% of the net tangible assets are held in monetary assets, the issuer has utilized or made firm commitments to utilize such excess monetary assets in its business or project. This limit of 50% shall not apply in case of IPO is made entirely through an offer for sale. the issuer has an average operating profit of at least ₹ 15 Cores, calculated on a restated and consolidated basis, during the three preceding years with operating profit in each of the three preceding years; the issuer has a net worth of at least ₹ 1 crore in each of the preceding three full years, calculated on a restated and consolidated basis; in case the issuer has changed its name within the last one year, at least 50% of the revenue calculated on a restated and consolidated basis, for the preceding one full year has been earned by it from the activity indicated by the new name. An issuer who does not meet the above criteria can still make an IPO provided it offers 75% of its issue to QIBs and follows book building process for discovery of price.