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Home | Getting Started | Personal Finance | Q & A | Sample Portfolio | Glossary | About Us |
| Date: Tuesday 16th 2010f March 2010 04:33:53 PM |
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Q& A - Raising Money In Capital Market - 03/19/2009 |
| By: Hari Wibowo |
| Name: UDEME |
| Website: N/A |
| Date posted: Thur, March 19, 2009 |
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Question:
if a company
is coming to raise money from the capital market, how do we set the offer price, especially if the company is coming for the first time |
| Answer: |
| When a company is raising fund from the public for the first time, it is commonly called as Initial Public Offering (IPO). To figure out the best offering price, the company relies on underwriting firms. Generally, a company would want to offer as high of a price as possible while giving little control. However, an underwriter will help the company to gauge market condition and the valuation of other companies in the industry. This will provide the company with an idea how much money they can raise from the investing public. Before an IPO, underwriter will also help the company to 'window-dress' and market the IPO, which may result in higher offering price. At current down market condition, however, it is very unlikely that a company will get high offer price. Therefore, investors will notice that IPO will be more popular during a rising market. |
| Hari - Novice Investing |
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END |
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Hmm, I am confused. And I have questions |
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I'm fine, thanks. Bring me back to main page |
| Disclaimer: The sole purpose of this article is educational. This article is merely the opinion of the writer and is not in any way a buy/sell recommendation regarding any securities. |
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