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
- No stamp duty payable
- No commission charged on your initial investment
- 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- During the period between the intention to float being announced and the start of the offer, the intention may be withdrawn.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.