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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 It is the biggest cancellation of IPO this year, with over $1 billion worth of IPO withdrawn. In addition, a total of $3 billion worth of IPO have been withdrawn so far in August, making it the worst month for cancellations for 2006.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.
Group 1 Automotive Initial Public Offering News
BlackRock Buys Stake in Formula 1 Ahead of Singapore IPO - International Business Times
 Bloomberg | BlackRock Buys Stake in Formula 1 Ahead of Singapore IPO International Business Times By Benjamin Reeves: Subscribe to Benjamin's RSS feed Formula 1, the popular global auto racing sport, is speeding to a possible initial public offering as major investment houses Waddell & Reed Financial Inc. (NYSE: WDR), Norges Bank Investment ... CVC sells $1.6-bn stake in Formula 1 ahead of IPO Formula One Said to Get Nod for $3 Billion Singapore IPO |
'Trigger-Happy' Investors Boost IPO Insurance Through Litigation - Bloomberg
 Bloomberg | 'Trigger-Happy' Investors Boost IPO Insurance Through Litigation Bloomberg Almost 19 percent of the 3510 initial public offerings on a US stock exchange between 1996 and 2009 were defendants in at least one US securities class-action, according to Cornerstone Research. Groupon, the biggest online coupon company that has ... |
US HOT STOCKS: Hewlett-Packard, Pandora, NetApp Active In Late Trading -1- - Wall Street Journal
US HOT STOCKS: Hewlett-Packard, Pandora, NetApp Active In Late Trading -1- Wall Street Journal Nasdaq OMX Group Inc. (NDAQ, $21.81, -$0.51, -2.28%) is facing a lawsuit seeking to represent investors who sought to trade shares of Facebook (FB, $32.00, +$1.00, +3.23%) during its initial public offering last week, only to allegedly suffer millions ... |
CVC Said to Seek Up to $13.5 Billion for European Fund - Bloomberg
CVC Said to Seek Up to $13.5 Billion for European Fund Bloomberg The firm agreed yesterday to sell 21 percent of Formula One to BlackRock Inc. and two other investors for $1.6 billion as it prepares an initial public offering of the auto-racing series it took control of in 2006. To contact the reporter on this ... |
GM Says It No Longer Plans to Advertise on Facebook - Bloomberg
 Bloomberg | GM Says It No Longer Plans to Advertise on Facebook Bloomberg GM spent $10 million for paid ads on Facebook last year, according to a person familiar with the situation who declined to be named because the information isn't public. Facebook plans to raise as much as $16 billion through an initial public offering, ... GM Cuts Facebook Ad Spending, But Ford Steps on the Gas |
Ally's ResCap Deal May Pave the Way for Sale, IPO - TheStreet.com
 TheStreet.com | Ally's ResCap Deal May Pave the Way for Sale, IPO TheStreet.com ... took from the government during the financial crisis and remove one of the biggest barriers for the former banking and auto-finance arm of General Motors(GM) to eventually go public in an IPO or be sold in pieces to lenders like Wells Fargo(WFC). Ally Gets Nod for ResCap Filing as U.S. Seeks Repayment ResCap Nears Bankruptcy Filing |
Samvardhana Motherson Finance Shelves IPO - Wall Street Journal
Samvardhana Motherson Finance Shelves IPO Wall Street Journal By KHUSHITA VASANT MUMBAI – India's Samvardhana Motherson Finance Ltd. was Friday forced to shelve its initial public offering to raise 16.65 billion rupees ($312 million), as the company met with feeble investor response. |
Analysis: Facebook friends Itaú BBA in nod to Brazil growth - Baltimore Sun
Analysis: Facebook friends Itaú BBA in nod to Brazil growth Baltimore Sun Itaú BBA last week won a coveted role on Facebook Inc's IPO advisory team, becoming one of 33 banks that will underwrite one of the most eagerly awaited stock market debuts ever. The deal gives the São Paulo-based firm more global visibility and ... |