We often come across the terms Initial Public Offering, or IPO, or the phrase ‘going public’ in reference with a company. It is almost as if they are the buzzwords in the finance and investing universe. The truth is, they are. Let’s have a closer look at these concepts.
What is an IPO?
An initial public offering, or IPO for short, is the process by which a private company goes public, ie.e offers its shares to the public in a new stock issuance. It is a crucial transition – because the private investors are looking to fully gain from their investment in the form of share premiums, but also because this mode allows public investors to participate as investors.
The activity is highly loaded with jargons and processes in adherence to the Company Laws: the company going public selects underwriter(s) and choose an exchange on which the shares will be issued and subsequently traded.
World’s 10 largest IPOs
The messaging platform Slack went public recently. So did the taxi aggregators Uber and Lyft. Close on the heels was the social media company Pinterest, and Airbnb is expected to debut this year too. IPOs always make big news and furore because they are a massive investment opportunity. Let’s have a look at 10 of the largest IPOs.
1. Alibaba Group Holding Limited
Alibaba Group Holding Limited, a diversified online e-commerce company based in China, being traded on the stock as BABA, went public on September 18, 2014, at a whopping $21.8 billion. Underwritten primarily by Credit Suisse, it was listed on the New York Stock Exchange (NYSE).
2. SoftBank Corp
SoftBank Corp raised 2.65 trillion yen ($23.5 billion) after pricing the offering at 1,500 yen a share. It was listed on the Tokyo Stock exchange and was underwritten by Nomura Sec. This figure makes it Japan’s biggest IPO and just below Alibaba’s record $25 billion listing on Wall Street in 2014.
3. NTT Mobile
NTT DOCOMO, a Tokyo‑based telecommunications player went to the public market on October 22, 1998. It raised around $18 billion. NTT was underwritten by Goldman Sachs (Asia) and was previously listed on the NYSE.
The credit card company set a record in March 2008 by raising $17.9 billion. The Underwriters were led by JP Morgan and Goldman Sachs and was listed on the New York Stock Exchange.
5. AIA Group
AIA, a Hong Kong-based investment and insurance company, went public with its IPO on October 21, 2010, on NYSE. It raised around $17.85 billion and became the largest publicly listed pan-Asian life insurance group.
6. ENEL SpA
An Italian electricity company, Enel went public in September 1999 as part of a privatization program by the country’s government. Underwritten by Merrill Lynch and listed on NYSE originally, it raised almost $17.4 billion.
This social media company listed on Nasdaq on May 1, 2012, and raised just over $16 billion amid an array of controversies and accusations. In fact, a $1,000 investment then would be worth more than $4,600 as of November 2018.
8. General Motors
General Motors made its public debut on November 16, 2010, and raised $20.1 billion in its initial public offering.
ICBC went public on the Hong Kong Stock Exchange in 2016. According to Reuters, it raised up to US$21.9 billion.
10. Deutsche Telekom
Way back in 1995 and 1996, this German Telecom giant was listed on the stock exchanges in Frankfurt, Tokyo and the US, in order to expand to international markets, and managed to raise $13.2 billion.
One way you can be a participant in the stock market, and benefit from such an IPO offering is if you choose to invest in mutual funds. Mutual Funds are investment tools wherein a number of entities/people (investors) who share a common financial goal invest capital. If you don’t have expertise in the market, mutual funds are the best way to invest in the market, since the pool of money is maintained and run by professional managers, and they decide which instruments to invest in, across company stocks, shares and bonds. The Securities and Exchange Board of India (SEBI) regulates mutual funds in India. You do have some say in where you would like this allocation to be inclined. For instance, an equity mutual fund is one where at least 65% of the funds are invested into equity shares. You can choose hybrid mutual funds too – aggressive hybrid funds invest majorly in equity whereas conservative hybrid funds invest the majority of their funds in debt instruments. You can invest in mutual funds online through Finserv MARKETS where your online mutual fund is just a click away.
At Finserv MARKETS, you get to invest in your desired products without losing money on commissions and get timely, detailed portfolio summaries and insights into the performance of your investments.
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