What is an IPO?

What is an Initial Public Offering (IPO)?

An Initial Public Offering (IPO) is the first offering of a company's ordinary shares to investors.

The following are often cited as key benefits of admission to a public market:

  • Listing provides access to capital growth, enabling companies to raise finance for further development, both at the time of admission and through further capital raisings.
  • The transfer of ownership of a business from a Government to a privately owned entity which is often achieved through listing the new private company on the stock market.
  • Creating a market for the company's shares thus broadening the shareholder base.
  • Placing an objective market value on the company's business.
  • Increases the company's ability to make acquisitions, using quoted shares as currency.
  • To increase and improve the public image of the company.

Please note this is an advertisement and not a prospectus, and you should not make an investment decision on the information contained here without consulting the relevant risks in the prospectus.

Benefits and risks to investors investing in an IPO

Benefits

  • No stamp duty payable
  • No commission charged on your initial investment

Risks

  • There may be a lack of historical data on a company that is subject to an IPO.
  • During the period between the intention to float being announced and the start of the offer, the intention may be withdrawn.
  • You may not receive the full amount that you have applied for as the company may scale back the applications if the offer is oversubscribed.
  • Share prices can fall as well as rise. The listing price of the stock may be lower than the issue price.
  • Tax treatment depends on the individual circumstances of each client and may be subject to change in future.
  • You are not guaranteed to make a profit; the value of your investments can go down as well as up. You may not get back all the funds you invest.

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The value of your investments can go down as well as up. You may not get back all the funds you invest.