IPOs Explained
Why invest in IPOs, share offers and new bond launches through Arcadia Group
1. Low cost
Free to apply for IPOs, share offers and bond launches available through Arcadia Group. However a fee may apply for holding shares and bonds, and there will be a dealing charge when you sell, which is ONLY 1% of the profits (not of initial invested capital).
2. Flexibility
Apply for an IPO, share offer or bond launch and make payment through a self-managed super fund, trading platform, bank transfer or bank to bank. Please be aware some IPOs or bond launches may be restricted to a single account so it is important upon placing a trade that you inform your broker.
3. Expertise
We have been involved in 3.500+ IPOs and share offers over the years and have the facility to make them available to private investors, meaning we are bringing you into an offering from the ground floor along with the Banks, Hedge Funds and corporate giants.
4. Access to a wide range of IPO's
Get access to share offers and IPOs around the world - large or small - as we handle many, or have a partnership agreement, which allows us to leverage some of the stock for our clientele. If you have heard of an IPO and want more information, just ask and we will do the rest.
Risk & Reward
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Between the Intention to Float announcement and the start of the Offer Period, the intention may be withdrawn
Any publication of an IPO or bond launch on our website is not an endorsement of the issue, nor is it solicitation for interest in the issue. Any decision to invest in a PRE IPO should not be made solely on the basis of the prospectus or supplementary information being made available at that time, as there may be additional changes after publicising that information. Investing in the PRE IPO stage is almost like being rewarded for your trust & confidence in the company going public, in the early stages.
Dividends are not guaranteed and, if paid, are variable. Companies subject to an IPO may not have a long track record and could be difficult to value or calculate a fair price for. IPOs and bond launches are therefore only likely to be a consideration for more diverse, larger portfolios.
Although we inform an investor of the current IPO pricing, be wary of those who do not share that information. Some brokerages will not divulge the purchase price before you commit to buy and you therefore might end up buying at a higher price than you wished. If you have any doubts about the suitability of an IPO for your circumstances you should seek expert advice.
IPO Prospectus
Once released you may request to see the prospectus which will include following important information
1. The nature of the industry in which this company operates. What will the industry probably be like in the future? How strong is the competition? Do monopolies exist in this market? In addition to analyzing IPOs that investors are interested in, investors should analyze other companies in the same industry; what is their performance? What is the stock price for comparison?
2. Competitiveness of the company, by considering the company’s market share, and their operating policy. Are there competitors and who are they?
3. The purpose of raising funds. This purpose can be for use in business expansion, repayment of debts or use as working capital of the company. This information will help assess future opportunities and risks.
4. Analyze the financial statements of the company, financial ratio analysis and anticipating future results. This is done by analyzing the income statement to see the profitability, analyzing cash flow statements to see the ability to generate cash flow and quality of profits, and analyzing the balance sheet to check the financial status, debt repayment ability and the capital structure of the company.
5. Consider shareholders, especially the major shareholder. Who is he and how reliable is he?
Investigate shareholding ratio; is there a major shareholder or many shareholders holding a small number of shares. Because if it is the latter then entering the market after the expiration of the prohibition period can affect the price of the stock and the credibility of the company in the future.
6. It is important to consider investment conditions at the time that IPOs enter the market. Because if the market conditions tend to be negative, the stock may have a lower price than expected when entering the market, and this may result in losses.
Should you wish to review a particular Prospectus which has been officially made public allow us to obtain a copy for you to understand more.
Buying PRE IPO shares
This option is not generally made available to individual retail investors.
Companies that are looking to raise several millions of dollars, often avoid allowing retail investors to get involved in the early stages, as such investments are usually out of reach for them. They therefore target the banks, hedge funds or brokerages, as they have the facility to purchase large blocks of stock. The advantage to the buyer of investing in the early stages is that he can hold on to the stock until it goes public, and cash in on the elevated price.
In general, investors will be able to purchase IPOs in two ways.
The most popular way is to get involved in a PRE IPO placement as this is the stage you will find the lowest price throughout the whole IPO process.
A pre-IPO placement is a sale of large blocks of stock in a company prior to listing on a public exchange. The purchaser gets the shares at a reduced price, and buyers tend to be banks, hedge funds or brokerages confident of the company’s future. For the company, the placement is a way to raise funds before the IPO and use them to build a better promotion platform.
PRE IPO Pricing is a big factor
1. PRE IPO - Buying IPO shares before entering the market
The most popular way is to get involved in a PRE IPO placement as this is the stage you will find the lowest price throughout the whole IPO process.
Based on past IPO investment statistics, if the stock market has a good trend, the IPO shares that will be traded on the first day will have a chance to reach a level above the opening price and more often than not give higher returns. Therefore, a PRE IPO investment is considered an investment with a high-profit opportunity within a short period of time.
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2. Purchase IPO shares in the market when the shares are traded
When investing in this period, investors must carefully study the basic information of the IPO stock, and should not hurry to invest in IPO stocks during the first 1 month of trading. In the first period after going public, there will be high speculation causing the stock price to be very volatile. Therefore, investors should wait for the IPO to trade for a while so the stock price has a chance to stabilize, and is reflecting the fundamental factors of the business better. This will help reducing the chances of loss and help to improve long-term returns.
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To find out more about IPO's or if you have a particular IPO in mind contact one of our specialists.
Some of the bigger IPO's Arcadia Group have been involved with.
Arcadia Group has been involved with over 3500 IPO's