An initial public offering (IPO) is the process by which a privately-held company becomes a publicly-traded company by selling shares of its stock to the public. This is an important milestone for a company, as it allows it to raise capital from a larger pool of investors, including institutional investors and individual investors.
Why IPO always the dream of most of the private company?
There are several reasons why an IPO can be an important event for a company:
- It allows the company to raise capital to fund growth and expansion.
- It can increase the company’s visibility and credibility, which can help it attract new customers and business partners.
- It can provide liquidity to the company’s founders and early investors, who can sell their shares to the public and reap the rewards of their hard work and investment.
- It can give the company access to new sources of financing, such as the ability to issue additional shares or sell bonds to the public.
Overall, an IPO is an important event that can help a company achieve its goals and reach new levels of success.
What are the major benefits of a company having IPO?
There are several benefits that a company can gain by conducting an initial public offering (IPO) and becoming a publicly-traded company. An IPO allows a company to raise capital by selling shares of its stock to the public. This can provide the company with the funds it needs to finance its operations, growth, and expansion. Also, liquidity for founders and early investors is important. An IPO also provides liquidity for the company’s founders and early investors, who can sell their shares to the public and reap the rewards of their hard work and investment. In addition, enhanced visibility and credibility will be definitely an advantage. Going public can also increase the visibility and credibility of a company, as it must disclose detailed information about its operations, finances, and business plans to the public. This can help the company attract new customers, business partners, and investors.
As a publicly-traded company, a company can also have improved access to other sources of financing, such as the ability to issue additional shares or sell bonds to the public. This can provide the company with additional flexibility and resources to support its growth and success. As a result, potential for increased shareholder value, why? By becoming a publicly-traded company, a company can also potentially increase its shareholder value over time, as the company’s stock price can rise if its performance and prospects improve. This can provide investors with a return on their investment and help the company achieve its goals.
What are the requirements of a company to proceed IPO in Hong Kong?
In Hong Kong, companies looking to conduct an initial public offering (IPO) must meet certain requirements set by the Hong Kong Stock Exchange (HKEX). These requirements include the following:
- The company must have a business track record of at least three years.
- The company must have a profit track record of at least two consecutive years, unless it is a company in the growth enterprise market (GEM) board or a company with special characteristics, such as a bio-tech company.
- The company must have a minimum public float of 25% of its issued shares, unless it is a company in the GEM board or a company with special characteristics.
- The company must have at least 300 public shareholders holding at least 1,000 shares each.
- The company must appoint a sponsor, who is a licensed corporation that provides advice and assistance to the company throughout the IPO process.
- The company must prepare and submit a listing application and a prospectus to the HKEX, which must be approved by the exchange before the IPO can take place.
In addition to these requirements, companies must also comply with various other regulations and guidelines, including those related to disclosure, corporate governance, and shareholding structure. These requirements are designed to protect investors and ensure that the IPO process is fair and transparent.
The differences of ICO and IPO
An initial coin offering (ICO) and an initial public offering (IPO) are both types of fundraising events. In an ICO, a company or organization raises money by selling cryptocurrency tokens to investors, while in an IPO, a company sells shares of stock to investors.
There are a few key differences between ICOs and IPOs:
- An ICO is typically used to raise funds for a new cryptocurrency or blockchain-based project, while an IPO is used to raise funds for a traditional company.
- In an IPO, investors receive shares of stock in the company, which give them ownership rights and a claim on the company’s assets and profits. In an ICO, investors receive tokens that may have different functions, such as giving access to a product or service, or being used as a means of payment on a platform.
- IPOs are heavily regulated by government agencies, such as the Securities and Exchange Commission (SEC) in the United States. ICOs, on the other hand, are generally not subject to the same level of regulation, although this is starting to change as governments around the world begin to crack down on fraudulent ICOs.
- IPO investors are typically institutional investors or wealthy individuals, while ICOs can be open to anyone.
- IPO investments are generally considered to be less risky than ICO investments, since the companies that conduct IPOs are typically well-established and have a track record of success. ICOs, on the other hand, are often associated with higher risk, as the projects they fund may be unproven and there is a higher likelihood of fraud.