An initial public offering (IPO) - the occasion when a firm's shares are issued to the public for the first time - is one of the most exciting events in the life of a company, providing new opportunities for the business, its managers and for investors. IPOs thus attract a lot of attention from stock market researchers, academics and investors seeking to understand more about how they work and how the shares of IPO companies perform once they are listed.
In this new book, Arif Khurshed delves into the history of IPOs on the London Stock Exchange, explains the mechanics of how IPOs are arranged and how they are priced, and provides an analysis - with detailed but lucid reference to past academic studies - of how the shares of IPO companies perform in the short and long term.
The book provides valuable insight into many fundamental IPO matters, including:
- the different methods of flotation that are used,
- the alternative ways in which IPO shares are priced,
- how common it is for IPO shares to over or underperform,
- the survival of IPO firms once they are listed.
There are also detailed case studies of a number of high-profile IPOs, including those of Google, Visa and MoneySupermarket.
If you are an academic, finance professional or serious investor looking to broaden your knowledge of stock market flotations then you will find Initial Public Offerings to be an indispensable guide.
About the Author
Arif has taught corporate finance for more than ten years and has been an active researcher in the field of initial public offerings (IPOs), institutional investments and corporate governance. He has published his research in several finance journals and has contributed many book chapters. His research has been covered by the Investors Chronicle, the UK press (The Times) and the Thai press (The Nation). Arif has been an external consultant to the UK stock market regulator, the Financial Services Authority (FSA) and to the British Venture Capital Association. Initial Public Offerings is his first book.
Table of Contents
About the Author vii
Chapter 1 An Introduction to IPOs 1
1.1 The life cycle of companies 3
1.2 Why companies conduct IPOs 4
1.3 Company preparation for an IPO 9
Chapter 2 A History of IPOs 17
2.1 The London Stock Exchange 19
2.2 Regulatory and administrative history of UK IPOs 25
2.3 A brief history of IPOs in the UK since 1945 26
2.4 High-profile UK and international IPOs 32
Chapter 3 Mechanics of IPOs 45
3.1 Methods of flotation 47
3.2 The timetable of an IPO 53
3.3 How IPOs are priced 59
3.4 Applying for IPO shares 69
3.5 How IPO shares are allocated 72
3.6 Trading IPO shares 73
3.7 The grey market 75
Chapter 4 The Performance and Survival of IPOs 77
4.1 How IPOs perform when trading in their shares commences 79
4.2 The survival of IPOs 110
4.3 An analysis of the performance of UK privatisation IPOs 113
Chapter 5 Investing in IPOs 117
5.1 Where to find information on firms planning an IPO 119
5.2 The IPO prospectus 119
5.3 What else to look for in an IPO firm 135
5.4 Ten summary rules for IPO investment 137