...Initial Public Offerings In order to gain funds for their organization, companies use initial public offerings (IPOs) to introduce their first sale of stock to the market, which is available to investors. An IPO allows a company to tap a wide pool of investors to provide itself with capital for future growth, repayment of debt or working capital (Wikipedia.com). Avaya, a global leader in business communications and phone systems, is considering an IPO in the near future but is uncertain of which method of IPO to use. Since Avaya has been a publicly traded company in the past, and it’s recognized and established global brand has seen no hint of decline in its profits or popularity (thetelecomblog.com), it would be best for the company to use an auction based IPO. Based on current analysis and findings, it would be best that the executives of Avaya Corporation use the auction based type of IPO because it could bring the highest profit per share to the company. Since the company has been publicly traded before, investors may already have knowledge of the company’s potential and bid higher for the shares. In return, Avaya could make more than anticipated if they were to set the value of the shares. In the auction based IPOs the bids are open to a larger investor pool, which include investors that have been in the business for decades and those that are new to the investing process. This expansion in investors can raise the bids higher because of the added competition in the auction...
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...The impact of IPO’s in Indian economy 1) An Introduction to Indian economy. 2) IPO 3) How IPO’s contribute to business development 4) How development in business contribute to Indian economy 5) Reliance IPO’s 6) History and future scope for IPO’s 7) Failure of facebook IPO (1) The economy of India is the eleventh largest in the world by nominal GDP and the third largest by purchasing power parity (PPP) The country is one of the G-20 major economies and a member of BRICS. On a per capita income basis, India ranked 140th by nominal GDP and 129th by GDP (PPP) in 2011, according to the IMF. Currently the GDP of India worth 1.676$ trillion and the GDP growth rate was 6.5% for (fy) 2012. The Indian Equity market is divided in to two parts Primary market - where the share is first issued in the form of IPO (Initial Public Offering) and after issuing the share it is listed on exchange and share is traded on exchange where shares can be bought and sold this is secondary market. In India mainly there are two exchanges –NSE (National Stock Exchange) BSE-Bombay Stock Exchange. The BSE is the oldest exchange in India (started in 1875).NSE started operation on 1994. Today NSE outpaced BSE in volume of trade (2) IPO or Initial Public Offer is a way for a company to raise money from investors for its future projects and get listed to Stock Exchange. Or An Initial Public Offer (IPO) is the selling of securities to the public in the primary stock market...
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...At the given time, when compared to other internet related IPO's that were around $12-17 per share, doubling the cost doesn't seem justifiable. However, Netscape was hands down, the leader of web browsing at the time with its nearest competitor targeting a different market. We would argue that the internet related IPO's are not directly comparable because of Netscape's popularity already. Additionally, the underwriters had already seen an overwhelming oversubscription causing them to raise the amount of shares offered to 5 million. While we don't have access to the data the underwrites used to come up with their valuation, we found that Netscape must grow at an approximate rate of 56 percent per year to justify a $28 share value. As an executive at Netscape, we believe that we would recognize that possibility to fetch more money than similar internet IPO's did, considering that they were somewhat underpriced and that we are perceived to be the "indisputable leader." This knowledge, coupled with the response from the road show would make us confident in offering at $28 per share. As an investor, obviously we would want to buy at the lowest possible price. Finally, as a manager of an institutional fund, we would definitely be willing to buy and hold at the initial share price of $28 as this market has huge potential and Netscape already has incredible name recognition and are steps ahead of the competition, which is amazing for a company only 16 months...
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...Initial public offerings Initial public offerings Keith Broomfield Jr Trident University FIN501 Strategic Corporate Finance Professor: John Halstead Summer 2013 Keith Broomfield Jr Trident University FIN501 Strategic Corporate Finance Professor: John Halstead Summer 2013 Module 1 Case Module 1 Case 1) What type of IPO should AVG use—a traditional IPO or an online auction? Based on your analysis and findings, what would you recommend to the executives of AVG? Explain your reasoning in detail. As I understand the formula/process. Most IPO's are underwritten by an investment banking organization that specializes in providing venture capital to launch an organization toward a public offering. Once the valuation of the company whose public offering is being considered is established then shares are created. These shares represent a certain value or stock domination as based on the company's worth through their product, service or manufacturing capability as identified by the Investment Banking Firm. In other words what current market share does the pending IPO company have, their current net worth and the future of their product and the market they currently affect, oh yes and do they have a proprietary product or patent and what's their competition about. This is a rather simplistic formula and for the sake of time will work for now. Those initial shares are first offered to large institutional investors. These institutions are capable of providing large capital...
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...A PROJECT REPORT ON “PERFORMANCE OF INITIAL PUBLIC OFFER" AT GURUKRUPA INVESTMENTS BARDOLI. SUBMITTED BY KRUNAL.B.PATEL 06 MBA 33 SUBMITTED TO MR.GOVIND DHINAIYA MBA PROGRAMME (YEAR 2006- 2008) SHRIMAD RAJCHANDRA INSTITUTE OF MANAGEMENT AND COMPUTER APPLICATION DECLARATION I, undersigned Mr.krunal .B. Patel, student of Shrimad Rajchandra Institute Of Management & Computer Application, Bardoli, affiliated to Veer Narmad South Gujarat University, Surat declare that report on “PERFORMANCE OF IPO” is my own work. The research was carried out by me as a part of summer training in the company for being evaluated for the MBA degree. Place: Date: __________ (Patel Krunal .B) (06 MBA 33) ACKNOWLEDGEMENT I as the student of management, feel proud on successfully completing the project on “PERFORMANCE OF IPO” at “GURUKRUPA INVESTMENT” of Bardoli. A project of this nature involves the support of many people. I believe that I would be lacking in my duty if I did not express my sincere gratitude to them. I am extremely thankful to Dr. Bankim Patel director, and Mr.Govind Dhinaiya, my project mentor for providing good guidance and other facilities during my training program. I m heartily thankful to Mr. Nitin Prajapati...
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...of growth by acquisition worked for a while for the company and helped generate sufficient revenues, but now new measures need to be taken to generate funds. When Mr. Merriman is choosing a set price for Hop-In Food Stores Incorporated’s initial public offering, several factors should come into the decision. First, the choices of the company and the company’s characteristics are vital in the decision. Understanding what the firm owns and holds in debt will help to establish a value on Hop-In Food Stores. This provides a big link between the value of the company and how much more capital you would like to raise and will be able to raise. Underwriting is also an important aspect of IPO’s because it allows the company to realize what the demand is and how the company can meet it. Looking at past IPO’s of similar companies will also give a good idea as to what was used, why it was used and what went wrong. The risks of pricing the stock too high can cause low share amount purchases by the public, unbalanced books, and insufficient amount of capital that Hop-In Foods was hoping to raise. Additionally overpricing leaves room for the market for their shares to not develop. This leaves needed capital that isn’t available to expand the company and continue generating revenues. Overpricing would cause an eventual fall in the price of Hop-In’s stock and a possible loss that your company cannot afford. If prices were to be underpriced, the possible risks the company could face are just...
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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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...believed that multichannel broadcasting with interactive technology would create a new revenue stream, improve F1’s global appeal, and support his planned initial public offering (IPO). Formula One’s IPO never took place. During this same time period the European Union began an antitrust investigation, claiming the FIA had exercised monopoly power by giving one company exclusive broadcasting rights. Considering so much of F1’s profits come from TV revenue, Ecclestone had to cancel the IPO due to the pending legal case and instead opted for a bond issuance that raised $1.4 billion for his family trust. Taking a company public through the IPO process or financing through a bond issuance, have many advantages and disadvantages for a business. IPO’s provide companies the opportunity to raise capital to grow the business by offering investors an ownership stake in the company without impacting its debt-to-equity ratio. The Juner case is a perfect example of a company decided to go public because it needed to raise capital to expand production and increase its R&D but did not have enough cash flow to support it. The bond issuance Ecclestone opted for also provided immediate capital but directly impacted F1’s debt. Bondholders would be paid out of the revenues received from race promoters and broadcasters. Another benefit of an IPO is that they can provide current...
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...International Journal of Management (IJM) Volume 7, Issue 3, March-April 2016, pp. 172–184, Article ID: IJM_07_03_016 Available online at http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=7&IType=3 Journal Impact Factor (2016): 8.1920 (Calculated by GISI) www.jifactor.com ISSN Print: 0976-6502 and ISSN Online: 0976-6510 © IAEME Publication INVESTOR EXPECTATIONS ON ‘RETURN’ AND ‘TRUST’ ON IPO GRADING: AN EMPIRICAL ANALYSIS Biju Thomas Muttath Head–Finance (Star Group), Research Scholar, R&D Centre, Bharathiar University, Coimbatore–46, T.N, India Dr. Assissi Menachery Professor, Loyola Institute of Technology & Science, K.K Dist, T.N, India ABSTRACT Oversubscription during IPO is the result of demand over supply due to investors’ keen interest and expectation to subscribe new shares. Grading agencies play a major role in attracting investors to subscribe shares during IPO. This is due to the ‘trust’ that investors have on the grading agency, regarding its capability to perform research on the key fundamental indicators. Informed and knowledgeable investors act vigorously to get maximum shares during the initial public offer. Book building pricing method plays vital role in attracting the investors who anticipate efficient price discovery. The study attempts to provide insights to investors on how significantly efficient the listing prices of oversubscribed shares between 1 to 5 grades by approved rating agencies are; as well as the profitability...
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...Investment Banking and IPO Process Investment banking contains enables several functions for be executed, such as: lending and investing assets, providing advice about investments and acquisitions, research and development about securities, capital markets, and bonds. For example, Morgan Stanley provides global currency, precious metals, insurance, and structured investments that are tailored to market trends and specific risk allocated decision making regarding the individuals portfolio. Investment banking also incorporates other important roles such as analysis of financial performance and operations. Financial transactions can be done as well in investment banks from individuals or corporations. Initial Public Offering Process IPO’s begin with a preliminary valuation that is based on the company's financials; the underwriters will prepare a preliminary valuation of the company. All the underwriters will also factor in the assumed growth rate of the company and industry, as well as the multiples (or price/earnings ratio) assigned to...
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...is secondary market. In India mainly there are two exchanges –NSE (National Stock Exchange) BSE-Bombay Stock Exchange. The BSE is the oldest exchange in India (started in 1875).NSE started operation on 1994. Today NSE outpaced BSE in volume of trade (2) IPO or Initial Public Offer is a way for a company to raise money from investors for its future projects and get listed to Stock Exchange. Or An Initial Public Offer (IPO) is the selling of securities to the public in the primary stock market. Company raising money through IPO is also called as company ‘going public'. From an investor point of view, IPO gives a chance to buy shares of a company, directly from the company at the price of their choice (In book build IPO's). Many a times there is a big difference between the price at which companies decides for its shares and the price on which investor are willing to buy share and that gives a good listing gain for shares allocated to the investor in IPO. From a...
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...the strengths, weaknesses, and opportunity among the current choices. The strength of an Initial Public Offering (IPO) Island Hotel Resort- BaderMan would continue to maintain complete control over the decisions that the Resort makes, they would be able to make improvements and expand with the money generated from the IPO, and the economic advantage of raising capital is a major strength, along with maintaining the founder’s vision. An IPO can also increase public awareness, investors who never heard of BaderMan resort will look in a direction that they may not have considered before the opportunity to invest presented itself Weaknesses of an IPO One choice a company has is to introduce the IPO to the public. The IPO’s will have to be within the expected act established 1934 in regard to periodic finances that may be complicated for companies in the primary. Preparation for other systems and policies enforced by the SEC, these cost can be quite expensive. As they have increased with the arrival of the Sarbanes Oxley’s Act. “Some of the additional costs include the generation of financial reporting documents, audit fees, investor relation departments and accounting oversight committees”( Investopedia 2006) Merger, Strengths vs. weaknesses: Strengths if the company were in a financial bind than a merger would be in the best interest of the company the strength of the merger would be...
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...Program & Batch: | PGDM 2012-14 | Term: | VI | Course Name: | Predictive Modeling | Name of the faculty: | Dr. A K Chauhan | Topic/ Title : | The Significance of Rating in Primary Stock Market (The IPO Grading System): The Indian Experience | Original or Revised Write-up: | Original | Section, Group Number: | Section A, Group 8 | Contact No. and email of Group Coordinator: | 8750399936, sgr6714@gmail.com | Group Members: | Sl. | Roll No. | Name | | 1 | 12FN-109 | Saikat Ghosh Roy | | 2 | 12FN-114 | Sankhadeep Biswas | | 3 | 12FN-131 | Soumya Roy | | 4 | 12FN-138 | SubhenduMitra | | 5 | 12FN-026 | Aritra Raymukherjee | | 6 | 12FN-048 | Gaurav Garg | | 7 | 12IT-001 | AbhisekKarmakar | | 8 | | | Contents Table of figures: 3 Introduction: 4 Hypotheses: 4 Hypotheses testing: 4 Descriptive Statistics: 4 Ho1: There is no difference in terms of investor’s response to all IPO Graded Issues. 5 Ho2: There is no difference in the IPO possessing different Grades in terms of Underpricing 6 Ho3: There is no relation between the IPO Grades and the Liquidity of the Issue on the listing Day 6 Ho4: There is no relation between IPO Grades and the IPOs Valuation 7 Impact of IPO grading on different Output Variables:Regression Analysis 9 Table of figures: Table 1: Descriptive Statistics of Age and frequency distribution for different IPO gradings 4 Table 2: Descriptive statistics for different subscriptions (times) against various...
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...Characteristic of IPO Initial Public Offering (IPO) has lots of unique characteristics which including short-term underpricing, price stabilization, and investment banks. IPOs are always underpriced which means the pricing of IPOs often below its market value. This is because of concerns relating to liquidity and uncertainty about the level at which stock will trade. The lesser the liquid and uncertainty about the shares are, the more underpriced they will have to be in order to compensate investors for the risk they are taking. An IPO’s issuer tends to know the value of the shares than the investor so a company has to underpriced its stock to encourage investors to invest the IPO. Companies that want to venture out and start selling their shares to public have find a way to stabilize their initial share prices. One of the ways to stabilize the initial share prices is through a legal mechanism which greenshoe option. A greenshoe option is a clause that contain in the agreement of an IPO which allows the underwriters to buy up to additional 15% of company shares at the offering price. Normally the underwriter works as a liaison (like a dealer) and finding buyers to buy their shares that their client is offering. The price of the shares is determined by the sellers and the buyers. After the prices has determined, the shares are ready to sell to the public. The underwriter has to ensure that the shares do not below the offering price. Once the underwriter found there is chances...
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...provide itself with capital for future growth, repayment of debt or working capital. • Significant legal, accounting and marketing costs •Get new capital to sustain growth/improve financial position. • Ongoing requirement to disclose financial and business information •Greater liquidity for firm’s equity. • Meaningful time, effort and attention required of senior management •Potential increase in equity value. • Risk that required funding will not be raised •Diversification of initial share holders’ personal portfolios and easier transfer of ownership. • Public dissemination of information which may be useful to competitors, suppliers and customers Google would be under intense scrutiny from Wall Street because of many failed IPO’s for the past couple of years. They also have a lot of competition from Yahoo and Microsoft. An area of concern was that Microsoft might design a version of its text processing software that could block the access of Google’s search technology to text documents. Their financial health is pretty stable and their revenues and profits have been growing. •If you were the founder of a private firm about to do an IPO, which method would you prefer (book-building or Dutch auction)? Why? Discuss this specifically in the context of the pros and cons of the book-building and the auction methods of doing an...
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