Public sale offer (IPO)

A public sale offer (IPO) is an operation where one or more shareholders, or even the company itself, put financial assets up for sale . 

For the company it has no effect on the share capital since there is only one change in ownership, not on the number of shares that the company has in circulation. Public sale offers can be aimed at the general public or be restricted.

Types of public sale offers

There are, mainly, two types of public sale offers:

  • IPO of unlisted shares: These are companies that were not listed on the stock market and who want to list shares for the first time, for which an application for listing is necessary.
  • IPO of listed shares:Refers to listed companies, where one or more majority shareholders put their shares up for sale.

Reasons for making an IPO

There are several reasons or reasons to carry out an IPO. Among them are:

  • When a company wants to go public. You need at least 25% of the shares offered to be distributed among the public, this requirement is called sufficient distribution.
  • The desire of a significant shareholder to dispose of a shareholding package.
  • The placement of treasury shares held by the company in the portfolio (treasury stock). In this case, the IPO is not carried out by the shareholders but by the company (restricted IPO).

When to invest in an IPO

Investing in an IPO and generating profits is not a sure thing. However, there are certain moments when it pays to invest in a public sale offer:

  • As long as we have analyzed the value. After analyzing it, we are confident that after its IPO it will increase in value. In this way, we will not have to go to the market where the share price may have shot up.
  • In times of economic growth they are usually successful. On the contrary, in times of stock market dips or market instability they tend to fail.
  • If small investors have obstacles to access the IPO. Because if the company carries out large campaigns to reach a mass audience, it is usually an alarm signal. Great opportunities are not offered to the general public.

Despite all of the above, it should be noted that these are only assumptions. The most important thing is to analyze each individual case and not take anything for granted.

 

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