Will Investing in IPOs be a risk-free option in 2011? What is the prospect of real estate IPOs? How do I choose the right IPO? Also explain IPO, FPO and right issue.

The fate of all IPOs cannot be predicted based on the performance of a single one. Each IPO will have to be judged on its own merits, business fundamentals and valuation levels. Remember, any investment in equities, whether it is through the primary or secondary market routes or through IPOs, always carries risk.
In the backdrop of the global financial crisis, investors are wary of putting in money in real estate companies. Lack of transparency and reliability in their financial and operating metrics has affected its image. Historically, whenever a sector or group of stocks have lost investor’s confidence, it has taken a long time for such stocks or sector to make a comeback in investor portfolios. We expect real estate IPOs to meet the same fate in 2011 as they did in 2010 with marginal improvement.
While investing in IPOs, choose a good business franchise with a sustainable business model, reasonable growth prospects, an investor-friendly management and one that ensures that the price being paid for the stock is reasonable.
IPO or initial public offer, as the name indicates, is the maiden public issue by a company that was hitherto unlisted. FPO or follow on public offer is a public issue brought about by an already listed company which wishes to expand its capital base by allotting further shares to the public. Rights issue is an issue of shares by a listed company to its existing shareholders at a pre-decided price (that is normally at a discount to its current market price) and in a predetermined proportion (say, one share for every two shares held). The existing shareholders can, however, renounce their rights to others at a price.