initial public offering

DEFINITION 


In a company, an IPO is an operation in which one or more shareholders offer his actions to the public in general. The principal characteristic of this operation is that it does not change the number of shares, and It does not change the capital of the company.
 
 

TYPES OF IPO

- Initial public offering, Company that decides for the first time to listed on stock exchange

  for it must establish before a certain number of offered actions, his price and date of offer

- IPO listed shares, this equity offering is when a company already in stock exchange so a majority shareholder decides to sell all or part of their participation, therefore the capital of this company diversified , for which he has also previously set the number of shares, the price and date.

The initial public offering is often more difficult to place their shares due to the risk involved to offer the shares at the time it is listed on stock exchange

AGENCIES INVOLVED IN THE IPO

  •           Global Coordination Entities, organization in charge of coordinating the supply of IPO in all sections
  •           Lead Managers, usually financial institutions involved in the management and preparation of the IPO in each of their sections
  •           Placement entities , entities in charge of distributing the public shares tendered
  •           Insurance entity, which are committed to ensure that the operation is complete, so here all shares will be sold. Therefore, if all shares are not sold , the insurance companies the shares that are not sold will remain.

These actions are normally performed by a single entity, which is usually a financial institution this is a bank.

WHO IS

Generally an IPO is divided into four sections :

• The first section is defined as the retail section, and is composed of small investors.

• The second section is the international section, consists of foreign companies interested in taking control of the company conducting the IPO.

• The third section is the institutional section, it refers to financial institutions that buy large amount of stock or buy a ground control or looking for future profits.

• The fourth and last tranche is the employees, enabling them to acquire shares with different conditions to those of other investors, with some gratuities for example at a lower price.

FINALITY

- Privatization or departures exchanges of public companies.

- IPOs of private companies.

- Sale of meaningful participation , ie when a majority shareholder ( who owns a large number of shares in a company ) sells its stake in a society that is already traded.

- To get Financing. 

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