What is IPO?
IPO stands for a *private(unlisted) company issues stocks to the public, enabling general investors to purchase them. It entails disclosing stocks and management details to the market.
In over-the-counter markets, companies determine stock prices . However, through an IPO, the market determines the stock price.
Advantages of IPO for Businesses and Investors
By selling shares, the company raises capital without incurring debt such as bank loans or bond issuances. A company uses the capital raised through an IPO for operation and growth. Furthermore, by disclosing company information, the company can expect to gain a promotional effect that enhances trustworthiness.
Investors can seize profit opportunities by assessing growth potential based on publicly available company information.
Process of IPO
Listing Application -> Review and Approval -> Securities Registration Statement Preparation-> Demand Forecast -> Subscription -> Listing
A *unlisted(private) compnay applies for listing on the Stock(Securities) Exchange.
The exchange approves if the application meets conditions.
The comapny collaborates with the *underwriter to prepare the securities registration statement.
A demand forecast(auction-style) is conducted targeintg institutional investors.
The price band for the offering is determined
The final offering price is determined
Subscription
Listing
Terms Related to Initial Public Offering (IPO)
Securities Registration Statement
Securities Registration Statement includes details on the method of public offering, the method of determining the offering price, the purpose of the IPO, the company's financial statements, its business status and so forth. It is a most-read material for investors and can be found in the database system such as EDGAR
Price band
Price band stands for the expected price range that investors can refer to when purchasing stocks. It consists of both minimum and maximum prices. The final offering price is determined within this range.
*Private(Unlisted) company: A company whose shares are not registered on the *stock market.
*Underwriter: A securities firm that assists with an IPO
*Stock market: KOSPI and KOSDAQ in Korea , NYSE and NASDAQ in the US, etc.
For IPO investments, it is essential to read securities registration statement to analyze the company and market, and evaluate the appropriate price.
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This is a summary of what I've studied.
Please let me know if you find any errors, and I'll happy to correct them.
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