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SHUBHAM AGRAWALSHUBHAM AGRAWAL asked 10 months ago
1 Answers
RaviRavi Staff answered 10 months ago

Company needs finance from capital markets
IPO will take lot of time they cannot wait 
They issue bulk shares to financial institution which can happen in less time and raise money 
Meanwhile they fulfilled all requirements to get listed 
After 8-12 months when market conditions are favourable financial institution goes for offer for sale and sales these shares to public at large and gets shares listed 
 
Win win situation for everyone 
Company is happy they got money early, financial institution is happy they got shares for cheap and sold for more 
Financial Institution is called sponsor in such case 

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