IPO - is the first public issue of shares of the company, which is generally carried out through stock exchanges.This quite fashionable abbreviation came to us from Western practices.However, the process is regulated by the Russian legislation, in particular the Law "On the Securities Market".It sets out procedures such as registration of the decision to issue equity securities, the requirements for forms certifying the right, indicated by the procedure of issue, state registration requirements for the prospectus and others. All the stages of manufacture must comply with this law and other regulations (includingapproved by the Federal Service for Financial Markets).
What's IPO in nature?We can say that basically this presentation program shares of the company to potential investors so that the securities of the latter are interested in - and they bought them.Parties in this process is the issuing company, underwriters, lead-managers (usually a bank), exchange platform and other persons.The key role played by the underwriters, who for a fee will ensure that this IPO will be held.
Before you make a public issue, the company has established itself in a certain way economically.To do this, she should be attractive financial statements for several years and good prospects for development, because every investor is interested in a secure and profitable investment.If the company is widely known for its products, it has implemented a program promissory notes, issue bonds, the chances of successful placement of shares increases.Moreover, the "famous" allows you to hold the first public issue at minimal cost to the organization.Initial public offering involves the placement of shares on the stock exchange, so the issuer must also know how it meets the requirements of a particular area - from the Russian MICEX-RTS to foreign NYSE or LSE.
Financial and other information is transmitted to the lead manager, who is preparing an information memorandum for the enterprise and organizes the so-called road shows.In the course of its meetings with potential buyers of the shares, representing the company, and disseminate information that is IPO will be carried out on certain dates.Also lead-manager selects a set of underwriters on the basis of what the latter has the investor base as a good reputation, what is the cost of services.
Securities in the IPO can be placed by the following methods:
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fixed price method.This method provides the most equitable access for all investors, who need only to choose how much to buy securities.
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auction.In this situation, shares are sold primarily to those who can pay more.
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Book a method which is the most common.The meaning of the procedure is that within the road shows collects information about the preferences of investors.Then draw up a book of orders underwriters, set the price and allocate the shares.In a number of cases, the risk of non-deployment of the entire responsibility is on the intermediary, asHe buys some shares for themselves.
What's IPO - a cost for the company?Experts point out that this is quite an expensive process, becauseservices of intermediaries may manage in 3% of the amount of emissions, and additional expenses for lawyers, accountants, advertising agencies may be about 1.5 million. dollars to Russia and more than 2.5 million. for overseas placements.
