chapter4 IPOPPT课件
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8
The IPO Conundrum(谜)
If you look at the experience of the different financial markets in the world, you will find three substantially different mechanisms for completing an IPO: auctions, fixed-price offerings, and book building. In an auction, the shares are offered for sale, on a predetermined schedule, to several competing potential buyers.
4
An IPO is needed for a company to sell stock to the general public for the first time and get a listing (a necessary precondition to the trading of securities on an exchange). The stock is sold either by existing shareholders, in what is called a “secondary offering,” or by the company itself as a “primary offering.”
7
Disadvantages of IPO
The process of going public is expensive and time-consuming. The management is under pressure to enhance short-term performance. If a substantial portion of shares is sold to the public, the firm ownership could face the risk of takeover.
10
In 2004, two academics examined the IPO methods used in forty-seven countries and found that book building, which was rare outside North America in the early 1990s, had become common around the world. According to recent estimates, about 80 percent of foreign IPOs now use the book-building method. The IPO conundrum is as follows: why is it that, while companies in most countries are giving up auction methods to use a book-building technique, in the United States companies like Google are doing just the opposite? In order to answer the conundrum, it is necessary to be familiar with the three IPO mechanisms.
9
Under a fixed-price offering, a certain number of shares are offered to retail investors at a preset price, which is generally identical to price offered to institutional investors. Book building is the process whereby the bank marketing the IPO gets to know the price investors intend to offer and the volume of the security they are interested in.
5
4.1 Initial Public Offering (IPO) Reasons for listing
6
Advantages of IPO
Enhance the corporate’s reputation Increase firms’ capital and improve firms’ finance. Establishing a new raising funds method by capital market
3
Raising equity capital is the traditional role of investment banks. It is, in fact, their core business, which they do either for companies that are already listed on a stock exchange or for a company’s initial offering. An offering of a stock that is already listed is called a “seasoned equity offering” (SEO), as opposed to an “initial public offering” (IPO).
Chapter 4
The Business of Equity Offerings
1
整体 概述
一 请在这里输入您的主要叙述内容
二
请在这里输入您的主要 叙述内容
三 请在这里输入您的主要叙述内容
2
Chapt百度文库r outline
three IPO mechanisms :auctions, fixed-price offerings, and book building Initial Public Offering Process Strategies in IPOs:Choosing the Lead Underwriter, the IPO Candidate, The case:The Google IPO
The IPO Conundrum(谜)
If you look at the experience of the different financial markets in the world, you will find three substantially different mechanisms for completing an IPO: auctions, fixed-price offerings, and book building. In an auction, the shares are offered for sale, on a predetermined schedule, to several competing potential buyers.
4
An IPO is needed for a company to sell stock to the general public for the first time and get a listing (a necessary precondition to the trading of securities on an exchange). The stock is sold either by existing shareholders, in what is called a “secondary offering,” or by the company itself as a “primary offering.”
7
Disadvantages of IPO
The process of going public is expensive and time-consuming. The management is under pressure to enhance short-term performance. If a substantial portion of shares is sold to the public, the firm ownership could face the risk of takeover.
10
In 2004, two academics examined the IPO methods used in forty-seven countries and found that book building, which was rare outside North America in the early 1990s, had become common around the world. According to recent estimates, about 80 percent of foreign IPOs now use the book-building method. The IPO conundrum is as follows: why is it that, while companies in most countries are giving up auction methods to use a book-building technique, in the United States companies like Google are doing just the opposite? In order to answer the conundrum, it is necessary to be familiar with the three IPO mechanisms.
9
Under a fixed-price offering, a certain number of shares are offered to retail investors at a preset price, which is generally identical to price offered to institutional investors. Book building is the process whereby the bank marketing the IPO gets to know the price investors intend to offer and the volume of the security they are interested in.
5
4.1 Initial Public Offering (IPO) Reasons for listing
6
Advantages of IPO
Enhance the corporate’s reputation Increase firms’ capital and improve firms’ finance. Establishing a new raising funds method by capital market
3
Raising equity capital is the traditional role of investment banks. It is, in fact, their core business, which they do either for companies that are already listed on a stock exchange or for a company’s initial offering. An offering of a stock that is already listed is called a “seasoned equity offering” (SEO), as opposed to an “initial public offering” (IPO).
Chapter 4
The Business of Equity Offerings
1
整体 概述
一 请在这里输入您的主要叙述内容
二
请在这里输入您的主要 叙述内容
三 请在这里输入您的主要叙述内容
2
Chapt百度文库r outline
three IPO mechanisms :auctions, fixed-price offerings, and book building Initial Public Offering Process Strategies in IPOs:Choosing the Lead Underwriter, the IPO Candidate, The case:The Google IPO