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A Sneak Peek of What Initial Public Offering or IPO is All About
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Google, the world’s Internet search engine giant, went public in April 30, 2004 in effort to raise $2.7 billion worth of additional investments.
The Madison River Communications Corporations also went public in December 23, 2004.
Telemar Participacoes SA pulled out their initial public offering last August 16, 2006, due to changes in market conditions. It is the biggest cancellation of IPO this year, with over $1 billion worth of IPO withdrawn. In addition, a total of $3 billion worth of IPO have been withdrawn so far in August, making it the worst month for cancellations for 2006.
These are just some of the “past and present” events that happened within the business community with regards to initial public offering or IPO. For individuals who do not follow the latest events in the business world, IPO is nothing but a simple three-word term. However, for investors who are planning to increase the profitability of their business, IPO is an essential component for them.
What is initial public offering or IPO? In financing, the term applies to the first sale of a corporation’s common shares to the public. Its major purpose is to raise additional capital for the corporation that will be used on various purposes, especially with regards to business operation. In other words, instead of securing a business loan to finance possible business expansion, many corporations files an IPO before the Securities and Exchange Commission (SEC), which is the governing body for IPO process.
Aside from SEC, there are also underwriters which are composed of several investment banks that will offer the corporation’s common shares to interested public investors through different methods. They usually assess the value of shares to the market, and paid by commission based on the percentage of the value of the shares sold to the public. In addition, since the IPO process are also governed with heavy legal requirements, corporations under IPO hire the services of major law firms across the country to help them draft a prospectus that will contain the corporation’s background, finances, and other related information. Such prospectus will be attached to the offer for sale as mandated by the regulations governing the process.
The aforementioned procedure is common on small and not well-known companies. For larger IPO deals (which involves multinational corporations as the issuer or the one selling common shares to the public), it is typically underwritten through a syndicate which is a group of major investment banks that have established themselves in the finance industry. In most cases, the commission that underwriters earned in large IPO deals reaches up to as high as 8 or 9 percent.
All IPO deals in the United States are under the jurisdiction of the Federal Securities Act of 1993 as well as state laws related to the conduct of IPO. If the deal will be done in Europe, the European Union (EU) have unified laws relating to IPO (the Prospectus Directive of 2003) despite the absence of any central regulatory mechanism for the process.
Underwriters in European IPO deals generally have joint and several liabilities for the underwriting of all offered shares for sale. It is relatively different compared to U.S. rules, wherein the underwriters are separately responsible for the allotted portion of the offering.
That is what initial public offering or IPO is all about, regardless of the country the deal will take place.
1 Automotive Initial Public Offering Stockholders News
NYSE pitches listing to Facebook after IPO mess: source - Reuters
 The Guardian | NYSE pitches listing to Facebook after IPO mess: source Reuters On Wednesday, shareholders filed a lawsuit against the No. 1 social network and its lead adviser, accusing them of hiding the company's weakened growth forecasts ahead of the IPO, which rivals General Motors (GM.N) as the second-largest US debut. It Might Pay to Be a Facebook Sucker To say its been a rough ride for Facebook's IPO would be an understatement. Inside the Facebook flop |
CVC Sells 21% Stake in Formula One Racing to BlackRock - Bloomberg
 International Business Times | CVC Sells 21% Stake in Formula One Racing to BlackRock Bloomberg CVC Capital Partners Ltd. said today it agreed to sell 21 percent of Formula One to BlackRock Inc. (BLK) and two other investors for $1.6 billion as it prepares an initial public offering of the auto racing series. Waddell & Reed Financial Inc. (WDR) ... Blackrock, others buy $1.6 bln stake in F1-sources BlackRock jumps in as F1 races to IPO BlackRock Buys Stake in Formula 1 Ahead of Singapore IPO |
How Ford's Credit Upgrade Helps Shareholders - TheStreet.com
How Ford's Credit Upgrade Helps Shareholders TheStreet.com By Roger Arnold In all my years on Wall Street this is the most outrageous and egregious deal I have ever seen. By Jim Cramer The timing of the disappointing Facebook IPO couldn't be worse as it relates to the retail investor. |
NYSE pitches listing to Facebook after IPO mess: source - IBNLive.com
NYSE pitches listing to Facebook after IPO mess: source IBNLive.com On Wednesday, shareholders filed a lawsuit against the No. 1 social network and its lead adviser, accusing them of hiding the companys weakened growth forecasts ahead of the IPO, which rivals General Motors as the second-largest US debut. |
Business briefs - Charleston Post Courier
Business briefs Charleston Post Courier That's still nearly 16 percent below the initial public offering price of $38. Meanwhile, a group of shareholders has sued Facebook, its executives and Morgan Stanley, the IPO's top underwriter. The suit alleges that the IPO documents contained untrue ... |
Facebook Boosts IPO Size As More Holders Sell Stock - Wall Street Journal
 USA TODAY | Facebook Boosts IPO Size As More Holders Sell Stock Wall Street Journal By Lynn Cowan and Rolfe Winkler Facebook Inc. boosted the size of its initial public offering to more than 400 million shares as major stockholders sharply increased the number of shares they intend to offer by nearly 50%, potentially lifting the value ... Facebook's IPO one of world's largest Facebook must change after IPO FACEBOOK IPO LIVE: The social network goes public |
Facebook IPO Pricing: Investors Brace For Wall Street Debut - Huffington Post
 Los Angeles Times | Facebook IPO Pricing: Investors Brace For Wall Street Debut Huffington Post AFP PHOTO/Emmanuel Dunand (Photo credit should read EMMANUEL DUNAND/AFP/GettyImages) SAN FRANCISCO/NEW YORK, May 17 (Reuters) - Facebook Inc is set to raise up to $18.4 billion in its IPO and become the first US company to be worth more than $100 ... Facebook IPO Closes With Thud Facebook shareholders are wedded to the whims of Mark Zuckerberg FACEBOOK IPO LIVE: The social network goes public |
Facebook wraps up IPO, set for big Friday pop - Reuters
 Toronto Star | Facebook wraps up IPO, set for big Friday pop Reuters * IPO priced at $38/shr, top of target range * Investor frenzy may spur outsized gains despite risks * Price tag, float, valuation may temper gains By Alexei Oreskovic and Olivia Oran SAN FRANCISCO/NEW YORK, May 17 (Reuters) - Facebook Inc is set to ... FACEBOOK IPO LIVE: The social network goes public Facebook Stock Closes Up Less Than 1% From IPO Facebook IPO falls short of the hype |