What is the difference between IPO and NCD?

Type of Security

In an IPO, shares are offered to the investors for the first time.

In NCD, debentures are offered to the investors.

Investment Duration

Shares can be held for a long term or a short period. IPO shares can be sold on listing itself.

Medium to long-term investment.

Risk

Risky as it depends on the market situation. No fixed returns.

Low risk as NCDs are generally secured and is a fixed income instrument.

Maturity

Does not involve any maturity period.

Has a maturity period determined by the issuer.

Interest Payment

The issuer does not make any interest payments; investors earn/make profit by selling the shares at a better price.

Issuer pays interest to investors.

Ownership

Ownership of shares transferred to investor.

Ownership or shareholding not transferred.