...Applied Corporate Finance | | | Submitted to: Mr.Asif MalikSubmitted by: Sana AmjadRoll no. 12L-5284MBA | | | | Department of management sciences | | The purpose of this assignment is to solve and study IPO in detail and provide the necessary solutions to it. Internet has been also used with referencing to seek out the solutions. Table of Contents Content | Page no: | Question A | 4 | Question B | 5 | Question C | 10 | Question D | 12 | References | | Question A: The IPO process is characterized by information asymmetries. Explain how these asymmetries may be reduced through the book-building process. IPO (initial public offering):- The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded.IPO process, are asymmetrically informed as managers and internal subjects posses private information about the firm's future prospects which may be not completely known to external investors. The process by which an underwriter attempts to determine at what price to offer an IPO based on demand from institutional investors...
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...homepage: www.elsevier.com/locate/jbf Underpricing of IPOs: Firm-, issue- and country-specific characteristics Peter-Jan Engelen a,*, Marc van Essen b a b Utrecht University, School of Economics, Utrecht, The Netherlands Erasmus University, Rotterdam School of Management, Rotterdam, The Netherlands a r t i c l e i n f o a b s t r a c t Using a large firm-level dataset of 2920 IPOs from 21 countries we examine the impact of country-level institutional characteristics on the underpricing of IPOs. Through hierarchical linear modeling we are able to control for firm-specific and issue-specific characteristics and test whether country-specific institutional characteristics add explanatory power to explain the level of underpricing. Our results show that about 10% of the variation in the level of underpricing is between countries. The quality of a country’s legal framework, as measured by its level of investor protection, the overall quality of its legal system and its level of legal enforcement, reduces the level of underpricing significantly. Ó 2010 Elsevier B.V. All rights reserved. Article history: Received 4 July 2009 Accepted 6 January 2010 Available online 11 January 2010 JEL classification: G30 G32 G38 K22 Keywords: IPO Underpricing Legal framework Investor protection Multi-level modeling 1. Introduction When companies go public, a well-documented phenomenon is the underpricing of the initial public offering (IPO). On average, shares seem to be offered at a price lower...
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...IPO Pricing of NESTLE Global for the Capital Market of Bangladesh: IPO pricing of Nestle Global for the Capital Market of Bangladesh [For the partial fulfillment of B.B.A. program in Finance] Submitted to Department of Finance University of Dhaka Supervised by Shakila Halim Lecturer Department of Finance University of Dhaka Submitted by Md. Sohebur Rahman Roll: 17-055 Sec: A B.B.A.17th Batch Department of Finance University of Dhaka Date: 7th May, 2015 Letter of Transmittal 07th May, 2015 Chairman Exam Committee B.B.A. 17th batch Department of Finance University of Dhaka Subject: Submission of Internship Report on “IPO pricing of Nestle Global for the capital market of Bangladesh” Sir, I hereby, want to express my sincere gratification to submit my internship report on “IPO pricing of Nestle Global for the capital market of Bangladesh” Through the preparation of the report, I got an opportunity to apply my knowledge of B.B.A. program and to be acquainted with the practical field. I have given all the efforts to make this report a purpose serving one. I hope that you will appreciate my efforts and accept the submission of my report. Sincerely yours, Md. Sohebur Rahman Roll: 17-055 Sec: A B.B.A 17th Batch Department of Finance University of Dhaka Acknowledgement At the very beginning, I would like to express my sincere gratitude to Almighty Allah, who has given me the chance to complete my internship report in a very...
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...06_597 VER 03/07 14000 2006 IPO Report wilmerhale.com WILMER CUTLER PICKERING HALE AND DORR LLP Wilmer Cutler Pickering Hale and Dorr llp is a Delaware limited liability partnership. Our United Kingdom offices are operated under a separate Delaware limited liability partnership of solicitors and registered foreign lawyers regulated by the Law Society of England and Wales. In Beijing, we are registered to operate as a Foreign Law Firm Representative Office. WilmerHale principal law offices: 60 State Street, Boston, Massachusetts 02109, +1 617 526 6000; 1875 Pennsylvania Avenue, NW, Washington, DC 20006, +1 202 663 6000. This material is for general informational purposes only and does not represent our legal advice as to any particular set of facts, nor does it represent any undertaking to keep recipients advised of all relevant legal developments. ® SM Attorney Advertising ® Table of Contents 2 US IPO Market Review and Outlook 6 Law Firm and Underwriter Rankings 8 Regional IPO Market Review and Outlook – California – Mid-Atlantic – New England – Tri-State 10 Securities Offering Reforms Are a Year Older – Are IPO Issuers a Year Wiser? 12 Selected WilmerHale Public Offerings 14 SEC Expands Required Compensation Disclosures 18 PIPEs and Rule 144A Market Review and Outlook 21 SOX 404 – The Saga Continues 22 Is the AIM to Reincorporate? 24 Best Practices:...
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...issue privatization (SIP) of its state-owned enterprises (SOEs) in Hong Kong, despite the benefit of facilitating the domestic stock market development if performing SIP in China (Subrahmanyam and Titman, 1999) and the higher cost to list in Hong Kong. We address this issue by arguing that the positive effect of SIPs on the development of the domestic market may have limitations, especially when the domestic market is not well developed and cannot absorb rapid and large-scale SIP activities. To maintain domestic market order, it may be optimal to carry out SIP in overseas markets. Furthermore, by listing shares in developed overseas markets, SOEs from the less developed countries could leverage on the overseas markets’ better accounting, governance, and legal standards. By examining a sample of 92 Chinese firms listed in Hong Kong and the relevant control samples of purely domestically listed Chinese firms during the period of 1993–2006, we find supporting evidence for both arguments. Ó 2012 Elsevier B.V. All rights reserved. Article history: Available online 7 June 2012 JEL classification: G34 G39 Keywords: Privatization Overseas listing...
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...1. How does Facebook make money? What are the value drivers of its business? What is its comparative advantage relative to other social networking companies? At the time of the IPO, Facebook possessed two revenue streams: advertising ($3.145B in 2011) and payments ($0.555B in 2011). The advertising business delivered ads to Facebooks users. Users uploaded an incredible wealth of information to Facebook, including their authentic identities, interests, and social connections, allowing advertisers to target their ads to an unprecedented degree. Further, all user uploaded information became the property of Facebook, granting them a monopoly on the data. This hyper-focused approach contrasted with those of other major technology driven advertising firms, like Google, whose value proposition is the ability to reach a significant percentage of all consumers using the internet. Facebook’s other revenue driver, online payments, consisted of in-game purchases of virtual goods for social games. In 2011, all of this revenue was generated via Zynga games. This business relied upon consumers using Facebook as their home for socially-connected online gaming. Given that payments represented a small portion of Facebook’s revenue, and that the advertising business was at the time more developed and predictable, valuing the company as an advertising company rather than a hybrid advertising and payments company seems appropriate. The comparative advantage of Facebook relative to other...
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...ARTICLE IN PRESS Journal of Financial Economics 84 (2007) 330–357 www.elsevier.com/locate/jfec Politically connected CEOs, corporate governance, and Post-IPO performance of China’s newly partially privatized firms$ Joseph P.H. Fana,Ã, T.J. Wonga, Tianyu Zhangb a The Chinese University of Hong Kong, Shatin, N.T., Hong Kong b City University of Hong Kong, Kowloon, Hong Kong Received 19 August 2005; received in revised form 31 January 2006; accepted 6 March 2006 Available online 24 January 2007 Abstract Almost 27% of the CEOs in a sample of 790 newly partially privatized firms in China are former or current government bureaucrats. Firms with politically connected CEOs underperform those without politically connected CEOs by almost 18% based on three-year post-IPO stock returns and have poorer three-year post-IPO earnings growth, sales growth, and change in returns on sales. The negative effect of the CEO’s political ties also show up in the first-day stock return. Finally, firms led by politically connected CEOs are more likely to appoint other bureaucrats to the board of directors rather than directors with relevant professional backgrounds. r 2007 Elsevier B.V. All rights reserved. JEL classification: G34; L33; P31 Keywords: Political connections; Corporate governance; IPO performance; Partial privatization; China We appreciate helpful comments from Stijn Claessens, Mara Faccio, Simon Johnson, Florencio Lopez-deSilanes, John McConnell, Randall Morck, Harold Mulherin...
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...the recent stock price performance of Cetip SA, Brazil’s largest custodian for private debt, and an investment they had worked on together for Advent. The stock had traded at R$33 per share throughout the day, well above the R$25.50 for which Advent had sold its remaining stake to IntercontinentalExchange (ICE) only nine months previously. Advent had first contacted Cetip in early 2007, before the outbreak of the global financial crisis, seeking to acquire a stake in the company. Two years later, following a failed IPO and having fended off competition from several other private equity players, Advent completed its investment. During its two years of ownership, Advent helped Cetip in its transition from a non-profit mutual organisation, with more than 600 financial institutions as members, into a listed business with a strong growth profile. Following its demutualisation in 2008, the company reinforced its management team, implemented best-practice corporate governance, instilled a culture of innovation and performance improvement and subsequently acquired GRV Solutions, effectively doubling in size. As they wrapped up lunch with a traditional café, the three colleagues wondered whether Advent had sold its stake in Cetip at the right time. Had Advent really unlocked all of the remaining value in the investment? History of Private Equity in Brazil Private equity and venture capital (PE/VC) investment is a recent phenomenon in...
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...Introduction Authored in the wake of the Enron and WorldCom scandal, The Sarbanes-Oxley Act was enacted in 2002, to keep public entities from committing fraudulent financial practices. The name Sarbanes-Oxley derives from former Senator Paul Sarbanes and former Representative Michael Oxley. “The Sarbanes-Oxley Act (SOX) was signed into law by President Bush on July 30, 2002, and created a new private sector, nonprofit corporation-the Public Company Accounting Oversight Board (PCAOB)-to oversee the financial reporting of public companies. Among other changes, SOX's sweeping reforms required that a company strengthen auditor independence; have its chief executives sign off on the financial statements; obtain an opinion about its internal control systems; and have an internal audit function that is examined by external auditors” (Grumet, 2007). Part A Audit Committees The Sarbanes-Oxley Act affects audit committees of public company boards of directors. The committee of the board of directors is directly responsible for the public company financial statements, in addition to the appointment, compensation, and oversight of the work of any registered public accounting firm employed by that issuer. In the case of misunderstanding between management team and the auditor’s regarding financial reporting, it is the audit committee’s responsibility to get everyone involved on the same page. In addition, the audit committees need to monitor all financial information communicated...
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...Case Seminar Advanced Corporate Finance Tuesday 10:00 – 13:00, Room 23 Instructor: Tim Adam This case seminar discusses real-world business cases, which relate to the materials covered in Corporate Finance and Advanced Corporate Finance. The main topics are company valuation, capital structure, bankruptcy, corporate governance, project finance and corporate risk management. The main objective of the seminar is to apply the theoretical concepts of corporate finance and corporate governance to real-world situations. To do so we will discuss six Harvard Business School cases. In addition, there will be several company presentations of real-world business cases. This seminar has a high level of practical relevance, but it is also very labor intensive. Expect to spend at least eight hours each week on case preparations. Prerequisites All participants must have successfully passed Corporate Finance, and take Advanced Corporate Finance parallel or prior to this case seminar. Registration Students need to register for this seminar. Please submit your applications electronically (CV, most recent transcript) to Mrs. Bulwahn by April 8, 2016. If you do not attend the first session, your place may be given to other students on the waiting list. Evaluation Four case reports (80%), class participation (20%). Seminar attendance is obligatory. Course materials Cases can be purchased for a total cost of US$ 23.70 using a credit...
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...|IPO Valuation Procedure in Bangladesh | | | | | | | Internship Report IPO Valuation Procedure in Bangladesh Prepared for: Professor Shakil Huda Chairman IBA Career Center Institute of Business Administration University of Dhaka Supervised by: MsSyedaMahrufa Bashar Lecturer Institute of Business Administration University of Dhaka Prepared by: Asif Rezwan Roll: 64, MBA 44D and Management Trainee Officer, LankaBangla Investments Limited Institute of Business Administration University of Dhaka June 24, 2012 June 24, 2012 MS. Kanij Fahmida Assistant Professor Department of Accounting Faculty of Business Studies Bangladesh University of Business & Technology(BUBT) Dear Sir, Subject: Letter of Transmittal for Internship Report I, Ibna Shina Shibly, am submitting my internship report on “IPO Valuation Procedure in Bangladesh”. The internship period and the subsequent effort in writing this...
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...PUBLIC ISSUE IPO Initial Public Offer• When an unlisted company makes either a fresh issue of securities or offers its existing securities for sale or both for the first time to the public, it is called an IPO. This paves way for listing and trading of the issuer‟s securities in the Stock Exchanges. Eligibility for IPO • a) Net tangible assets of at least Rs. 3 crore in each of the preceding three full years • b) Distributable profits for at least three out of the immediately preceding five years • c) Net worth of at least Rs. 1 crore in each of the preceding three full years • d) The issue size should not exceed 5 times the pre-issue net worth • e) If there has been a change in the company‟s name, at least 50% of the revenue for preceding one year should be from the new activity denoted by the new name • Alternative routes Recognizing that many good companies, for one reason or the other, may not be able to comply with all the eligibility norms, two other alternative routes are available to such companies: • Alternative I: • Issue shall be through book building route, with at least 50% to be mandatory allotted to the Qualified Institutional Buyers (QIBs). (b) The minimum post-issue face value capital shall be Rs. 10 crore or there shall be a compulsory market-making for at least 2 years OR • Alternative II: • A) The “project” is appraised and participated to the extent of 15% by FIs/Scheduled Commercial Banks of which...
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...L e tte r o f T r a ns m itta l June 11, 2011 Dr. Md. Farid Ahmed Professor Department of Finance University of Dhaka Dear Sir, Here is the report on ‘Cause, Consequences and Cures of Stock Market Crash 2011: A Study on Dhaka Stock Exchange’ you asked us to conduct. Working on a practical field with theories helped us to build our theories strong and specific. We believe that this report will help the reader to know about the causes and consequences of the stock market crash. During preparing this report we have enforced our best effort. Surely, it enriches our knowledge and promotes our study. Thank you for giving us such an opportunity for working on the topic. We will be honored to provide you any additional information, if necessary. Respectfully, Taher Jamil (On behalf of the group) Executive Summary Between July and December 1996, the Bangladesh capital market experienced an unprecedented surge in market prices and volume of activity. It was not 1996 but 2011, which will be recalled for bubble burst of capital market. January 10, 2011 is another black day for capital market history of Bangladesh. For the first hour of trading, the DSE general index dropped to 660.43 points or a record 9.25 per cent, the highest single day fall of our capital market. CSE also observed similar fall in stock prices. Portfolios of most of the investors have been reduced significantly following such dripping...
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...environment affecting IPO decision” BRM Project – IKEA + IPO Abstract This research is aimed at developing a new model that should be able to determine for each privately owned company whether going public is a possibility for attracting new capital. Research upon IPOs resulted in variables of which a conceptual and hypothesized model were created. A meta-analysis and case study should determine the relevance and reliability of the model. Thereafter, a final model can be composed which can be applied to IKEA Group, our target company for the research, in order to obtain the final result; IKEA Group is qualified for an IPO, or not. Table of contents Introduction II 1. Rationale 1 2. Situational Analysis 2 2.1 Initial Public Offering 2 2.2 Advantages 3 2.3 Disadvantages 3 3. Theoretical Background 4 3.1 Initial Public Offering 4 3.2 Product market characteristics and performance 4 3.3 Industry characteristics 5 3.4 Initial underpricing 5 3.5 Hot and cold markets and IPO waves 6 3.6 Long-run performance 6 4. Conceptual Model 8 4.1 Hypotheses 9 4.1.1 Hypotheses Independent variables 9 4.1.2 Moderating Variables 9 5. Research design 11 5.1 Unit of analysis 11 5.2 Meta-analysis 11 5.2.1 The hypothesized model 11 5.2.2 The implementation 13 5.3 Case study 15 5.4 The implementation of the results 15 Bibliography 16 Appendices 20 * * Introduction Introduction The consideration of undertaking an IPO is one of the most...
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...increases of the objects. The higher prices offered by the PE companies also affects the number of initial public offerings (IPO) on the Dhaka and Chittagong Stock Exchanges. One reason for the small number of current IPOs is that the objects simply have been valued higher by PE companies than they would do in an IPO. PURPOSE: The purpose with this thesis is, from a shareholder’s point of view, to analyze and describe the reasons of making an IPO instead of selling to a PE company. METHODOLOGY: Since the research is based on gathering and understanding information regarding specific persons’ choices and motives, a qualitative approach has been conducted. CONCLUSION: All the main motives of the IPO could have been achieved by selling to PE Company, except the motive of attaining share liquidity. One of the attractive reasons for share liquidity is that shareholders easily can choose between reducing ownership, increasing ownership or remain with existing shares. Another attractive reason is that financial institutions normally become shareholders, which in turn increases the credibility of the company. Eight out of the ten companies had parallel plans to the IPO; most of them including a possible PE buy-out scenario. However, no PE Company offered a price high enough for the individual companies. Either the existing owners received a better IPO price, or the remaining owners believed that the stock exchange would out-perform the PE price offers in the long run. Theory...
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