Is it generally true that all IPO’s plunge soon after they are offered?
Monthly archive: August, 2008
Advantages of Going Public Through a Reverse Merger
Velva asks:
Dynasty Resources is your Gateway to business in China. Through partnerships with top companies, each specializing in a unique area of China business, Dynasty provides quality services that help you enter the most exciting market on earth.
Many firms opt for the reverse merger, whereby a private company’s shareholders gain control of a public company by merging it in with their private company. The private company shareholders receive a substantial majority of the shares of the public company (normally 85% to 90% or more) and control of the board of directors. The transaction can be accomplished in as little as two weeks, resulting in the private company becoming a public company.
Advantages of Going Public through a Reverse Merger
Increased Valuation: Typically publicly traded companies enjoy substantially higher valuations than private companies.
Capital Formation: Raising capital is usually easier because of the added liquidity for the investors, and it often takes less time and expense to complete an offering.
Acquisitions: Making acquisitions with public stock is often easier and less expensive.
Incentives: Stock options or stock incentives can be useful in attracting management and retaining valuable employees.
Financial Planning: Public company stock is often easier to use in estate planning for the principals. Public stock can provide a long term exit strategy for the founders.
Reduced Costs: The costs are significantly less than the costs required for an initial public offering.
Reduced Time: The time frame requisite to securing public listing is considerably less than that for an IPO.
Reduced Risk: Additional risk is involved in an IPO in that the IPO may be withdrawn due to an unstable market condition even after most of the upfront costs have been expended.
Reduced Management Time: Traditional IPOs generally require greater attention from senior management.
Reduced Business Requirements: While an IPO requires a relatively long and stable earnings history, the lack of an earnings history does not normally keep a privately held company from completing a reverse merger.
Reduced Dilution: There is less dilution of ownership control, compared to a traditional IPO.
Reduced Underwriter Requirements: No underwriter is needed: (a significant factor to consider given the difficulty companies face in attracting an investment banking firm to commit to an offering.)
The China corporate finance, Our partners are members of the New York Stock Exchange, the American Stock Exchange, the Archipelago Exchange and the Securities Investor Protection Corporation (SIPC). Please visit online http://www.dynastyresources.net in NewYork city.
Dynasty Resources is your Gateway to business in China. Through partnerships with top companies, each specializing in a unique area of China business, Dynasty provides quality services that help you enter the most exciting market on earth.
Many firms opt for the reverse merger, whereby a private company’s shareholders gain control of a public company by merging it in with their private company. The private company shareholders receive a substantial majority of the shares of the public company (normally 85% to 90% or more) and control of the board of directors. The transaction can be accomplished in as little as two weeks, resulting in the private company becoming a public company.
Advantages of Going Public through a Reverse Merger
Increased Valuation: Typically publicly traded companies enjoy substantially higher valuations than private companies.
Capital Formation: Raising capital is usually easier because of the added liquidity for the investors, and it often takes less time and expense to complete an offering.
Acquisitions: Making acquisitions with public stock is often easier and less expensive.
Incentives: Stock options or stock incentives can be useful in attracting management and retaining valuable employees.
Financial Planning: Public company stock is often easier to use in estate planning for the principals. Public stock can provide a long term exit strategy for the founders.
Reduced Costs: The costs are significantly less than the costs required for an initial public offering.
Reduced Time: The time frame requisite to securing public listing is considerably less than that for an IPO.
Reduced Risk: Additional risk is involved in an IPO in that the IPO may be withdrawn due to an unstable market condition even after most of the upfront costs have been expended.
Reduced Management Time: Traditional IPOs generally require greater attention from senior management.
Reduced Business Requirements: While an IPO requires a relatively long and stable earnings history, the lack of an earnings history does not normally keep a privately held company from completing a reverse merger.
Reduced Dilution: There is less dilution of ownership control, compared to a traditional IPO.
Reduced Underwriter Requirements: No underwriter is needed: (a significant factor to consider given the difficulty companies face in attracting an investment banking firm to commit to an offering.)
The China corporate finance, Our partners are members of the New York Stock Exchange, the American Stock Exchange, the Archipelago Exchange and the Securities Investor Protection Corporation (SIPC). Please visit online http://www.dynastyresources.net in NewYork city.
How do you calculate the WACC for this company?
Earline asks:
Company issues 400,000 shares in stock using an IPO and issues equity at $6 a share. This nets the company $5.
Company issues 400,000 shares in stock using an IPO and issues equity at $6 a share. This nets the company $5.
Industry Beta is 1.5
Debt ratio is .59
Equity ratio is .41
risk free rate is 9%
I have the B/S and I/S if that proves useful, but that’s all I have to try and calculate this. Any ideas?
Registration information for a Pre-IPO company?
Benedict asks:
I have a friend working in a company that has not disclosed the total number of outstanding shares to him. They have offered him X stocks without disclosing the total float. Is that information available some where. Does the company have to file that information with an regulatory body if they are not publicly traded. If so, where can I find this information.
I have a friend working in a company that has not disclosed the total number of outstanding shares to him. They have offered him X stocks without disclosing the total float. Is that information available some where. Does the company have to file that information with an regulatory body if they are not publicly traded. If so, where can I find this information.
Stock Trading- How to Approach the Stock Market
Lois asks:
Before an investor can begin to trade successfully in the Nigerian stock market, there are some basic skills that one needs to be able to position oneself for maximum profits.
The Nigeria stock market is made up of two markets, the primary and secondary markets. A sound understanding of how these two markets operate is very vital if you are going to succeed. At this junction, let’s x-ray these two markets to understand their workings.
? THE PRIMARY MARKET
The primary market is where fresh funds are raised, anyone who buys shares in this market does not pay any commission, If a company’s IPO is out for the public, all you do is to fill the form and issue your check,
The primary market is the period from the time of the IPO to the point where allotment was done and money returned to those who could not get all they requested for. The primary market is where both new (unlisted) and old (listed) can raise funds in the future either through PO, IPO, RIGHT ISSUES. Also, it is pertinent to mention here, that privete placement activities also are carried out by small sized companies that are aspiring to be listed at floor of the NSE also come to the public to raise funds privately.
? THE SECONDARY MARKET
In order to have an enabling ground to buy and exit effortlessly, the stock exchange provides the platform for trading in listed company shares by institutions and individual. The secondary market is where potential investors can buy and sell such shares. Those who buy at the primary market who have received their share certificate and those who bought directly from the floor transact business at the primary market.
? HOW THE SECONDARY MARKET WORKS.
Once a company is listed, trading on its shares commences. The issuer’s broker announces the listing of the shares, immediately after which other brokers start trading on the company’s shares from that day. Stockbrokers come to trade on behalf of stock brokerage firms; they are members of the Nigerian stock exchange and are represented at the trading floor by stockbrokers.
When a customer wants to buy a stock either by the advice of your stockbroker or on your own understanding, after the agreement on what to buy is reached, the customer gives his stockbroker a written mandate specifying those stocks. He will also fill out a CSCS shareholder’s form and transfer forms. The information given enables the customer to receive correspondence from the registrar and CSCS Ltd, In future, it is on these basis dividends, bonuses, annual accounts and reports will be sent to him. The customer will be issued a contract note by the stock broking firm, which is evidence of purchase. When such stock gets to an appreciable height in terms of capital appreciation in price, he fills out mandate for sale, mandating the stock broker/firm to sell on his behalf.
In the final analysis, approaching the stock market requires that you acquire the foundational know-how necessary for trading, so that you can know how to steer your way in the sometimes uncertain waters of stocks investment.
Before an investor can begin to trade successfully in the Nigerian stock market, there are some basic skills that one needs to be able to position oneself for maximum profits.
The Nigeria stock market is made up of two markets, the primary and secondary markets. A sound understanding of how these two markets operate is very vital if you are going to succeed. At this junction, let’s x-ray these two markets to understand their workings.
? THE PRIMARY MARKET
The primary market is where fresh funds are raised, anyone who buys shares in this market does not pay any commission, If a company’s IPO is out for the public, all you do is to fill the form and issue your check,
The primary market is the period from the time of the IPO to the point where allotment was done and money returned to those who could not get all they requested for. The primary market is where both new (unlisted) and old (listed) can raise funds in the future either through PO, IPO, RIGHT ISSUES. Also, it is pertinent to mention here, that privete placement activities also are carried out by small sized companies that are aspiring to be listed at floor of the NSE also come to the public to raise funds privately.
? THE SECONDARY MARKET
In order to have an enabling ground to buy and exit effortlessly, the stock exchange provides the platform for trading in listed company shares by institutions and individual. The secondary market is where potential investors can buy and sell such shares. Those who buy at the primary market who have received their share certificate and those who bought directly from the floor transact business at the primary market.
? HOW THE SECONDARY MARKET WORKS.
Once a company is listed, trading on its shares commences. The issuer’s broker announces the listing of the shares, immediately after which other brokers start trading on the company’s shares from that day. Stockbrokers come to trade on behalf of stock brokerage firms; they are members of the Nigerian stock exchange and are represented at the trading floor by stockbrokers.
When a customer wants to buy a stock either by the advice of your stockbroker or on your own understanding, after the agreement on what to buy is reached, the customer gives his stockbroker a written mandate specifying those stocks. He will also fill out a CSCS shareholder’s form and transfer forms. The information given enables the customer to receive correspondence from the registrar and CSCS Ltd, In future, it is on these basis dividends, bonuses, annual accounts and reports will be sent to him. The customer will be issued a contract note by the stock broking firm, which is evidence of purchase. When such stock gets to an appreciable height in terms of capital appreciation in price, he fills out mandate for sale, mandating the stock broker/firm to sell on his behalf.
In the final analysis, approaching the stock market requires that you acquire the foundational know-how necessary for trading, so that you can know how to steer your way in the sometimes uncertain waters of stocks investment.
Ril Sells 4.01% of Rpl’s Equity for Rs.4,023 Crore to Maximize Overall Shareholder Value
Babara asks:
Mumbai, Reliance Industries Limited (RIL) has sold 18.04 crore equity shares,representing 4.01% of the equity share capital of Reliance Petroleum Limited (RPL) out of its’ holding of 75%. The aggregate sale consideration is Rs4,023 crore.
After this sale, the shareholding of RIL in RPL is 70.99%.
RPL made an offering in May 2006 for 20% of its’ equity represented by 90 crore shares. This offering was
the most successful IPO until then with overall demand exceeding USD 32 billion.
The sale of RPL shares was conducted by transactions through the Stock Exchanges and has helped to
further broad base the shareholding pattern of RPL. The number of shareholders of RPL has increased from
12 lac shareholders at the time of IPO to 16 lac.
RPL is among the best performing stocks in the NIFTY index this year. It has, at current prices, provided a
return of 250% to its investors since the IPO.
The sale of shares monetizes only a very small portion of RIL’s holding in RPL.
Reliance Industries Limited
Reliance Industries Limited (RIL) is India’s largest private sector company on all major financial parameters
with turnover of Rs1,18,354 crore (US$ 27.23 billion), cash profit of Rs.17,678 crore (US$ 4.07 billion), net
profit of Rs. 11,943 crore (US$ 2.75 billion) and net worth of Rs. 63,967 crore (US$ 14.72 billion) as of
March 31, 2007. RIL is the first and only private sector company from India to feature in the Fortune Global 500 list of
‘World’s Largest Corporations’ and ranks amongst the world’s Top 200 companies in terms of profits. RIL
is amongst the 25 fastest climbers ranked by Fortune. RIL also features in the Forbes Global list of world’s
400 best big companies and in FT Global 500 list of world’s largest companies.
Reliance Petroleum Limited
Reliance Petroleum Limited (RPL), a subsidiary of RIL, is setting up a greenfield petroleum refinery and
polypropylene plant in a Special Economic Zone at Jamnagar in Gujarat. With an annual crude processing
capacity of 580,000 barrels per stream day (BPSD), RPL will be the sixth largest refinery in the world.
Mumbai, Reliance Industries Limited (RIL) has sold 18.04 crore equity shares,representing 4.01% of the equity share capital of Reliance Petroleum Limited (RPL) out of its’ holding of 75%. The aggregate sale consideration is Rs4,023 crore.
After this sale, the shareholding of RIL in RPL is 70.99%.
RPL made an offering in May 2006 for 20% of its’ equity represented by 90 crore shares. This offering was
the most successful IPO until then with overall demand exceeding USD 32 billion.
The sale of RPL shares was conducted by transactions through the Stock Exchanges and has helped to
further broad base the shareholding pattern of RPL. The number of shareholders of RPL has increased from
12 lac shareholders at the time of IPO to 16 lac.
RPL is among the best performing stocks in the NIFTY index this year. It has, at current prices, provided a
return of 250% to its investors since the IPO.
The sale of shares monetizes only a very small portion of RIL’s holding in RPL.
Reliance Industries Limited
Reliance Industries Limited (RIL) is India’s largest private sector company on all major financial parameters
with turnover of Rs1,18,354 crore (US$ 27.23 billion), cash profit of Rs.17,678 crore (US$ 4.07 billion), net
profit of Rs. 11,943 crore (US$ 2.75 billion) and net worth of Rs. 63,967 crore (US$ 14.72 billion) as of
March 31, 2007. RIL is the first and only private sector company from India to feature in the Fortune Global 500 list of
‘World’s Largest Corporations’ and ranks amongst the world’s Top 200 companies in terms of profits. RIL
is amongst the 25 fastest climbers ranked by Fortune. RIL also features in the Forbes Global list of world’s
400 best big companies and in FT Global 500 list of world’s largest companies.
Reliance Petroleum Limited
Reliance Petroleum Limited (RPL), a subsidiary of RIL, is setting up a greenfield petroleum refinery and
polypropylene plant in a Special Economic Zone at Jamnagar in Gujarat. With an annual crude processing
capacity of 580,000 barrels per stream day (BPSD), RPL will be the sixth largest refinery in the world.
I have been alloted 17 shares of reliance power IPO. How the bonus shares will be alooted me. Please suggest?
Marni asks:
I have been alloted 17 shares of reliance power IPO. As per declaration of company perhaps 9 (nine) numder of bounus shares may be alloted me. Please suggest how the bonus shares will be alooted me & waht is the procedure & whether there is any time limit of holding the oiginal allted shares for getting of bounus shares.. Please suggest.
I have been alloted 17 shares of reliance power IPO. As per declaration of company perhaps 9 (nine) numder of bounus shares may be alloted me. Please suggest how the bonus shares will be alooted me & waht is the procedure & whether there is any time limit of holding the oiginal allted shares for getting of bounus shares.. Please suggest.
