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What does IPO means?
The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded.

In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), best offering price and time to bring it to market.

Also referred to as a "public offering".

What does Investopedia says...
IPOs can be a risky investment. For the individual investor, it is tough to predict what the stock will do on its initial day of trading and in the near future since there is often little historical data with which to analyze the company. Also, most IPOs are of companies going through a transitory growth period, and they are therefore subject to additional uncertainty regarding their future value.

From Investopedia.com

hello,
since this topic is posted, i will put an abstract from my blog as a reply here... hehe...

We say we buy stocks or shares of a public listed company, but do we know why would a company want to go public?

So, why would a company want to go public? Why would they want to go through all the procedures and restrictions once they go public? Well, one of the reasons could be to raise a large amount of money for whatever purpose, for company expansion or some mega-projects. Now, there are a few ways out there for them to raise money, one is to loan form the bank, or to 'get' from the public.

Notice that I use the word ‘get'. It is not a typing mistake... When I say the company ‘get’ the money from the public, it means the company is going public and by offering shares. Of course there are rules and regulations that the company needs to follow.

Now, since the company is gong to get listed, they need to offer their shares to the public for the first time. They will go through a process called “Initial Price Offering (IPO). It is like offering their shares at a discounted price to the public because the price will normally be lower than the market price.

How much can they raise? That will depend on how much shares are offered. Just imagine, if they offer one million units of shares at RM1 a unit, they can actually raise RM1 million. And the best part is, they never need to return that money… That is why I say they practically ‘get’ the money from the public.