Talk:Initial public offering/Archives/2012

not a good explanation

the article seems most focused on certain technical details instead of a more general explanation

most people come to this article because they dont know anything about investing

I recently filled in some details on the greenshoe option often used in public offerings and believe that a link to that wiki entry would be appropriate in this section, so I intend to make an entry here with a link. I also think I might be able to add some more informative detail to this entry directly. Duedilly 04:38, 30 September 2006 (UTC) barry deegan rules ha ha ha

Also if someone can point out how new stock/IPO are traded, that will be helpful. —Preceding unsigned comment added by 67.170.249.19 (talk) 16:04, 14 October 2007 (UTC)

SEC filings

I think mentioning which SEC filings are involved with IPOs is important. The S-1 filing contains all the information anyone could want regarding company information, share distribution/amounts/pricing, risk factors, and other information. It was deleted by a moderator when added to links, so should I add this as a new section, or is it not important enough?

IPO definitions reqd

Can anyone explain what the following terms mean?
post issue capital
floor price
cap price
P/E
EPS
cut- off price

Here is a paragraph for reference:

The issue is priced at 11.90x FY07 E (HY 07 annualized) earnings on post issue capital at floor price and at 13.84x at cap price. The comparable peer is trading at a P/E of 36.31x with an EPS of Rs 41.44 (FY 07).

We recommend the investors to subscribe at the cut- off.

Thanks in advance,
Prasadpkamath 08:59, 4 May 2007 (UTC)

post issue capital
The capitalization after the offering. If the company had 1mm shares outstanding prior to the offering and was selling another million in the offering, investors are interested on per share numbers post-offering, as that would be the number tha applies to the shares they are considering buying in the offering.

floor price
cap price
In the context of your paragraph these seem to relate to the minimum and maximum likely price, per share, of the offering

P/E
Price-earnings ratio P/E ratio

EPS
Earnings per share

cut- off price I'm not sure from the context what is meant by this.

--Conant Webb 19:22, 8 August 2007 (UTC)

Conflict of Interest

It appears that User:Rmudambi, who has a number of edits to this article, has added numerous references to his own published works. Jauerback 03:14, 20 July 2007 (UTC)

What's even more irritating is that this user didn't even inline cite and I don't particularly wish to read through all that to find out where the references are. The articles do look legit and reasonably scholarly though. --Meowist 17:19, 1 September 2007 (UTC)

References, Inline Citations, and all that

I've added the first(!) inline citation to this article while clearing up the quiet period confusion (yes, there are two of them and no, the former still exists). I hope people will follow the trend and add more inline citations and, in so doing, clear out the rubbish references sections at the end of every section as well. For an article that, no doubt, gets ridiculously many page hits, it really, really ought to be inline cited. --Meowist 18:05, 1 September 2007 (UTC)

The Lock-Up Period

If you look at the charts following many IPOs, you'll notice that after a few months the stock takes a steep downturn. This is often because of the lock-up period.

When a company goes public, the underwriters make company officials and employees sign a lock-up agreement. Lock-up agreements are legally binding contracts between the underwriters and insiders of the company, prohibiting them from selling any shares of stock for a specified period of time. The period can range anywhere from three to 24 months. Ninety days is the minimum period stated under Rule 144 (SEC law) but the lock-up specified by the underwriters can last much longer. The problem is, when lockups expire all the insiders are permitted to sell their stock. The result is a rush of people trying to sell their stock to realize their profit. This excess supply can put severe downward pressure on the stock price. —Preceding unsigned comment added by 112.110.9.244 (talk) 10:41, 20 February 2009 (UTC)

Copy-paste from external source

Thought it was worth noting that the last paragraph in the introduction was lifted from Investopedia: http://www.investopedia.com/terms/i/ipo.asp - it should at least be quoted with a reference. --Scumble (talk) 11:24, 8 April 2010 (UTC)

Why was war59312's edits removed?

Why was my October 9, 2010 edits removed? 76.65.23.118 was the one who removed them. War59312 (talk) 19:46, 5 December 2010 (UTC)

A reverse IPO

can someone please put some explantion on a "reverse IPO" in this article? Jackzhp 19:39, 20 April 2007 (UTC)

There is really no such thing as a "reverse IPO." You may be referring to a "reverse merger" but that shouldn't be called a "reverse IPO". In a reverse merger, a private company merges into a publicly traded shell and there is not necessarily an "initial" or even a "public offering" of shares. It's just a merger. --Jarbdpo 09:15, 25 February 2011 (UTC)

Agreed. The phrase "reverse IPO" isn't meaningful, nor is it a consistently used term. As Jarbdpo said, it may refer to a "reverse merger", which is not a "reverse IPO". Another situation which could be considered a "reverse IPO" is an employee buy-back of all shares of a publicly traded company's stock. There are probably many other instances, none of them appropriate for being called a "reverse IPO" than others. Let's get the article as is, an IPO proper, cleaned up and complete, then consider whether to refer to variations, perhaps as a separate but linked page in "See also" section. --FeralOink (talk) 04:08, 28 June 2012 (UTC)

Issuance of Common Stock

Will Only Common Stock be issued for first sale in case of an IPO or non-equity also will be issued??

125.16.11.68 06:20, 4 August 2007 (UTC)Ravi125.16.11.68 06:20, 4 August 2007 (UTC)

It could be anything, but most frequently is common stock --Conant Webb 19:23, 8 August 2007 (UTC)

Yes, Conant Webb is correct that an IPO is usually common stock. And also that it could be other securities too, one of which is preferred stock. Preferred stock is something of a hybrid, and could be considered non-equity or equity depending on terms. Convertible bonds, stock warrants and maybe even (liquidation) preference shares could be part of an IPO. All are, to some degree, non-equity. This could be mentioned in the article once the fundamental sections are improved, or as a new section if adequately researched and cited. --FeralOink (talk) 04:20, 28 June 2012 (UTC)

how much Investment banks charge for IPOs

Hi. I think it would be a good idea to include here how much investment banks charge on average for IPOs. I heard the average is about 3%, although I might be mistaken. Can someone confirm this and include this information into the article? --M.efimov (talk) 09:58, 7 September 2010 (UTC)

Investment banks charge more than 3% of the amount raised. As a former partner of a large independently owned investment banking firm, we charged 6% to 10% of the capital raised, reimbursement of all fees/expenses (usually another 2% to 3% of the capital raised) plus a broker warrant equivalent to 10% of the stock issued. For example, if the financing was to raise $10 million by selling 1 million shares at $10 per share, we would generally earn $800,000 in commissions, $200,000 in expense reimbursements and obtain a warrant to purchase 100,000 shares (10% of the deal size) at $10 per share (the deal price). --Jarbdpo 09:15, 25 February 2011 (UTC)

Jarbdpo, what do you mean when you say that you were a former partner of a large "independently owned" investment bank? The only large investment bank that I know of that is a partnership (or was) is Goldman Sachs. In that case, it was owned by the partners. It is a "privately owned" investment bank. I'm not saying there is anything wrong with being privately owned n this context, but how is "independent", and of whom? If not a partnership, maybe you were a partner (and are no longer for this reason), was ownership status of this firm changed perhaps? If so, to what, such that it became "independent", and of whom? G.E. Capital is an example of a "dependent" I-bank if one considers it as a unit of G.E. Or it could be considered "independent" because it is not a Wall St. I-bank. But it doesn't have partners. This is why I'm curious, not merely to snark about your terminology, nor challenge the veracity of your comment about fees. Although the latter is interesting, sounds high, maybe not, should be verifiable, and would be nice to include in this article! --FeralOink (talk) 07:01, 30 June 2012 (UTC)

The ranking of the largest IPOs is INCORRECT

First, Petrobras's $70 billion capital raised was not in form of IPO (Petrobras was listed in the exchange long ago.)

Second, please check whether the size of GM's IPO is correct. From "Global IPO report 2011" by Earnst & Young, the size of that issue should be $18.1 billion.

Therefore, the largest three IPOs should be Agricultural Bank of China, Industrial and Commercial Bank of China and AIA Group.

Cheers, Enoch — Preceding unsigned comment added by 202.64.103.81 (talk) 06:53, 30 August 2011 (UTC)

This is incorrect. Or rather, it is not consistent with the sourced references in the article. Based on that, General Motors IPO IS the largest IPO in history at $23 billion. A reference to the Ernst & Young document mentioned is necessary. Until such is provided, I am reverting the content of the article BACK to what it was, in order that it be consistent with the sources referenced, which were Bloomberg and the Wall Street Journal. The article should not have been changed without providing the revised references as well, as it is VERY confusing as it is now.

And yes, you are correct regarding Petrobras, as that was not an IPO. Similarly, Burger King's recent (June 2012) public listing on the NYSE was not its I.P.O., as that occurred in 2006, but was through sales of securities to the public but not common equity listed on an exchange. Once the article is in better condition, it may be useful to mention that, not Burger King in particular, but the fact that "going public" versus doing an IPO of common stock listed on an exchange, are not necessarily equivalent. --FeralOink (talk) 07:14, 30 June 2012 (UTC)

Access to IPO Shares

Would it be useful to include a discussion of who gets access to IPO shares, and the bias of the underwriting process against smaller, non-institutional investors? — Preceding unsigned comment added by 173.74.34.41 (talk) 03:01, 13 January 2012 (UTC)

Yes! It would! Thank you. I will try to address that. Good point! --FeralOink (talk) 07:15, 30 June 2012 (UTC)

Need for additional references

I have been been working on this article in an attempt to organize and expand a few of the sections. However, many of the statements remain unsupported, and so need additional references. Gulbenk (talk) 04:52, 12 July 2012 (UTC)

GA Review

This review is transcluded from Talk:Initial public offering/GA1. The edit link for this section can be used to add comments to the review.

Reviewer: TheSpecialUser (talk · contribs) 14:55, 23 October 2012 (UTC)

I really don't like to quickly fail any nomination but unfortunately this is a similar case. The article is fairly big but with only 26 refs; nothing wrong with the number but large amount of facts are not sourced. Many paras are completely unsourced. In fact, many sections are entirely unsourced. The refs used need to be formatted properly. The article is tagged with one issue but it needs many tags such as refimprove, OR etc. I'm sorry to say but this article is far away from GA and thus, this has to be a quick fail. The issues cannot be addressed in 3 or 4 months so, have to fail. Good work is done on the article but not enough as each and every fact in the article should have sources which are well formatted. I'm not digging in any further and just failing it mainly due to lack of refs which are needed for verification of the material. Thank you. TheSpecialUser ^TSU 14:55, 23 October 2012 (UTC)

Not Neutral Point of View?

The first section has a list of benefits of being a public company, but no list of disadvantages. I am no expert but I can't imagine that there are no disadvantages. It makes the section read like a pep talk or a brochure or something, but not like an encyclopedia article. Omgoleus (talk) 21:39, 21 May 2010 (UTC)

I will add the disadvantages. --Jarbdpo 09:16, 25 February 2011 (UTC)

Those provided are appreciated but isn't this the exact point in which the company is now all but required to generate as much profit as it can with cost/benefit and risk/reward (obviously legal implications) analysis? Am I alone in thinking this is why we have the problem we have in the United States with corporations running government and driving our financial system into the ground without the ability to stop? Seems to me that when you have enough of these "people", created by money and whose only purpose is to generate money, all changing policy so they can more effectively make money, we have imminent disaster.

Hello Inventive Exile, be sure to sign your comments in the Talk section with four ~. Now to answer your question. Some companies that go public are not under any immediate pressure to produce profits. Junior pharmaceutical companies in clinical trials, and early stage mining companies come to mind as two examples. In those cases, the money raised from the IPO will advance them along their timeline, but they will probably have to raise additional capital before (and if) they achieve commercial production. But, yes, most corporations do have a strong incentive to produce profits. You see this as wrong? Where would the capital come from, to do research, to explore for resources, to produce the goods that we consume, if investors were not offered the possibility of a profit? In a system where the means of production is held by all, the funds would come from the State. In our system, the funds come from the private sector. Most investors will not put their capital at risk without the possibilty of a reward. The "imminent disaster" you fear would surely come about if the profit incentive is removed from the equation. Gulbenk (talk) 22:29, 10 November 2012 (UTC)