Category Archives: IPO

Things to Know about IPO Investment

IPO Investment

The primary function of a stock market is to help finance companies by allowing them to raise equity from investors. However, companies crossing the doors of the stock market also benefit from many indirect benefits…

How to raise funds

The contribution of fresh money is the first reason that motivates a company to enter the stock market. It finds among the investors present on the “Market” a financial surface much higher than that which could propose to him a bank … The very principle of the stock market is to organize the meeting between the holders of capital wishing to make them fructified and the companies seeking sources of financing.

Thus, in the vast majority of cases, the IPO takes the form of a capital increase: the company issues new shares representing a variable portion of its capital, according to management’s willingness to sell or not all or part of the control. In return, the investors bring him “fresh money” that the company uses as it sees fit. But to seduce these investors, it will have to explain the use it intends to make of this manna: acquisitions, new product developments, efforts of “R & D”, development of commercial forces, deleveraging … It depends on the economic sector, profile and ambitions of society. Once listed, the company will be able to solicit again this lever of the capital increase to finance itself…

How to Define your Investor Profile? 

This creation of securities may sometimes be accompanied by a sale by shareholders already in the capital who consider it appropriate to take advantage of the IPO to monetize their investment. Beware, however, the higher the share of sales will be important during an IPO, plus new investors may interpret a massive exit of former shareholders as a lack of confidence in the prospects of the company…

A new reputation

The IPO of a company makes it change status with its partners, customers, suppliers, bankers … The rating and “the exposure” it claims, that is to say the obligation to communicate a certain number of elements such as his accounts, makes a company more transparent, and therefore more reliable with his interlocutors. It will also find, via the quotation, a relay of important notoriety to the general public.

The Bourse facilitates the company’s initiatives, both at the commercial and institutional levels. The stock market recognition will also allow it to be more attractive in terms of recruitment for young graduates or senior executives. They will also be potentially motivated by the possibility of benefiting from free share schemes and stock options made possible by the listing…

Promote a heritage

The IPO puts a price on a company … This price fluctuates with the sword of the exchanges on the stock market, but it has the first virtue to be known, identified and fixed by the actors of the market, which is impossible in the unlisted! The owners thus value their securities in a precise way … The liquidity of the stock market also allows the founding shareholders to sell securities and thus secure their assets. In addition, media exposure, transparency on business trends and open capital can attract the interest of predatory companies in search of targets, often valuing the target company at a higher price than the market.

A guarantee of independence

The IPO can also prove to be a guarantee of independence for a company … Ventilated capital distributed among a multitude of investors, whether private or professional, makes it possible not to depend a single or a few shareholders likely to weigh on the strategy of the company in a sense not necessarily consistent with that desired by the leader…

Structuring a business

Because it is demanding, the stock market pushes companies that take the step to professionalization and strive for excellence in a number of areas: The Exchange drives efficiency … Exposure to investors, the general public, imposes transparency and rigor. The market, by daily monitoring it operates on listed companies, sanctions any broken promises and disappointments. With the stock market, the company must strengthen its financial services and often manages to better anticipate and manage risks…

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