What happens to the shares belonging to the existing shareholders after an IPO?

Answer 1

Lets consider an example. Suppose you own a 100% holding company. There are 20,000 shares and you own all of them. Subsequently, you decide to go for an IPO.
There are two scenarios.

1. Suppose your company issues 10,000 new shares and puts all of them on offer in IPO. Post IPO, the total number of shares will rise to 30,000 and your holding will drop to 66.67% (20,000/30,000) in the company.

2. Your company issues 5000 new shares and puts all of them on offer in IPO. Additionally, you put 5,000 of your own shares on sale. Post IPO, total number of shares will rise to 25,000 and your holding will drop to 60% (15,000/25,000).