Arif......theoretical info er bepar e ektu help koro.....Data analysis ta Robin kortese.....

tumi ei je niche jevabe deya hoise ovabe info ghaita ekta structure amare mail kroo...... Theoretical Background: 1. What is IPO (5 line min) 2. Importance of IPO (1/2 page) 3. What is IPO Prospectus(1/2 page) 4. Importance of IPO prospectus (1/2 page) 5. How It works and methods of publishing prospectus (1/2 page) 6. Relation of IPO prospectus in subsequent secondary market price (1/2 page)

IPO: he first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded. In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market. Also referred to as a "public offering" IPOs can be a risky investment. For the individual investor, it is tough to predict what the stock will do on its initial day of trading and in the near future because there is often little historical data with which to analyze the company. Also, most IPOs are of companies going through a transitory growth period, which are subject to additional uncertainty regarding their future values. Importance of IPO: New Capital Almost all companies go public primarily because they need money. All other reasons are of secondary importance. The typical (firm-commitment) IPO raises $20-40M, but offerings of $100M are not unusual either. This can vary widely by industry. Future Capital Once public, firms can easily go back to the public markets to raise more cash. Typically, about a third of all IPO issuers return to the public market within 5 years to issue a "seasoned equity offering" (the term secondary is used to denote shares sold by insiders rather than by firms). Those that do return raise about three times as much capital in their seasoned equity offerings as they raised in their IPO. Cashing Out

Although it is a bad signal to investors when an entrepreneur sells his own shares (indicating that [s]he is jumping ship), it still makes sense for many entrepreneurs to cash out some of their wealth to diversify or just to enjoy life. Mergers and Acquisition Many private firms just do not appear on the "radar screen" of potential acquirors. Being public makes it easier for other companies to notice and evaluate the firm for potential synergies. Image Public firms tend to have higher profiles than private firms. This is important in industries where success requires customers and suppliers to make long-term commitments. For example, software requires training and no manager wants to buy software from a firm that may not be around for future upgrades, improvements, bug fixes, etc. Indeed, the suppliers' and customers' perception of company success is a self-fulfilling prophesy. But public firms also tend to be larger to begin with, and this may explain why public firms on average have a better image. For example, although Gateway is private, there is no question that it will be around for a while. Going public would not aid increase its sales. The important question is if going public improves the firm's stakeholders' perception of success. Employee Compensation Having a public share price makes it easy for firms to give employees a formal stake in the company. IPO Prospectus: A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details about an investment offering for sale to the public. A prospectus should contain the facts that an investor needs to make an informed investment decision.

There are two types of prospectuses for stocks and bonds: preliminary and final. The preliminary prospectus is the first offering document provided by a securities issuer and includes most of the details of the business and transaction in question. Some lettering on the front cover is printed in red, which results in the use of the nickname "red herring" for this document. The final prospectus is printed after the deal has been made effective and can be offered for sale, and supersedes the preliminary prospectus. It contains finalized background information including such details as the exact number of shares/certificates issued and the precise offering price. In the case of mutual funds, which, apart from their initial share offering, continuously offer shares for sale to the public, the prospectus used is a final prospectus. A fund prospectus contains details on its objectives, investment strategies, risks, performance, distribution policy, fees and expenses, and fund management.

Importance of Ipo Prospectus: It is interesting to see a number of people expressing their desire to invest in a given company through an I.P.O of which they have little information of knowledge about like in the Case of the intended listing of Visa in the United States and Safaricom in Kenya. Most investors (I don't know if the same applies in America), normally rely on their emotions and gut feeling only in making the decision to participate in an I.P.O then afterwards spread the word to their friend creating a huge euphoria for the I.P.O. I don't deny the role of the publicity agency in creating the hype, much more actually comes from peoples' personal opinions about the share which leads me to expound the importance of a prospectus in any listing o avoid buying into company through an I.P.O then regretting later on your bad decision, it is important that you overcome your emotional attachment to the company and its products and rationalize the share offer. In order to do so, you need concrete information on which you shall base your decision upon. Most of this information is contained in the prospectus of the company that intends to list its shares on the stock exchange The prospectus includes very important information like the historical performance of the company in the previous years, the current owners of the company, the amount of shares that they are offering to the public, what they intend to do with the money after the I.P.O amongst other things. Any prudent investor will take his/her time to go through this information in order to make an informed decision on the amount of shares to take up or even if to participate in the offer. As an investor this are the things to look out for in the prospectus 1.The company performance in the pre-ceding years. This is important for you to develop performance trends and therefore be able to predict its future performance- all factors held constant. This is mainly done by looking at the statements of accounts. The balance sheet is important so as to look at the net book value of the share to determine if the company is overvalued or undervalued (offered at a discount) at the time of the offering. The net book value is arrived at by taking the total assets divided by the total number of shares. It will be interesting to see how safaricom arrived at its value for the share offer. What did it include as part of its assets to reach that price? The cash flow statement shows the company's ability to offset its debts in the short run thus avoid bankruptcy.