Ipo ppt goupno .6

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IPO of Facebook And Just Dial Inc

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Ipo ppt goupno .6

  1. 1. THE INITIAL PUBLIC OFFERING (IPO) By, GROUP NO.6
  2. 2. ROLL NO. NAME 120 Madhuri s.Dolas 94 Ruchita Gurav 136 Shantanu Shahasane 118 Mandar Desai 107 Mohit Singh [Team Leader] 2
  3. 3. Initial Public Offering (IPO)  Definition: A company’s first equity issue made available to the public.  This issue occurs when a privately held company decides to go public  Also called an “unseasoned new issue.”
  4. 4. Why do companies go public?  New capital  Almost all companies go public primarily because they need money to expand the business  Future capital  Once public, firms have greater and easier access to capital in the future  Mergers and acquisitions  Its easier for other companies to notice and evaluate a public firm for potential synergies  IPOs are often used to finance acquisitions
  5. 5. Is it a good time to do an IPO?  There are clear “windows of opportunity” that open and close for IPO issuers  Determinants of suitability: The general stock market condition The industry market condition The frequency and size of all IPO’s in the financial cycle
  6. 6. Outline of the IPO process: 1. Select an underwriter 2. Register IPO with the SEC/SEBI 3. Print prospectus 4. Present roadshow 5. Price the securities 6. Sell the securities
  7. 7. 1. Select an underwriter  An underwriter is an investment firm that acts as an intermediary between a company selling securities and the investing public  The underwriter is the principal player in the IPO  Typically, the underwriter buys the securities for less than the offering price and accepts the risk of not being able to sell them
  8. 8. Types of underwriting  Firm commitment underwriting: The underwriter buys the entire issue, assuming full financial responsibility for any unsold shares Most prevalent type of underwriting in the U. S.  Best efforts underwriting: The underwriter sells as much of the issue as possible, but can return any unsold shares to the issuer without financial responsibility
  9. 9. Leading IPO Underwriters 1. Goldman Sachs 2. Morgan Stanley 3. Merrill Lynch
  10. 10. Intermediaries and their Roles LEAD MANAGER DOMESTIC & INTERNATIONAL LEGAL COUNSAL AUDITORS REGISTRARS
  11. 11. 2. Register IPO with SEC  The firm must prepare a registration statement and file it with the SEC[US] /SEBI[INDIA]  The registration statement discloses all material information concerning the corporation making a public offering
  12. 12. 3. Print prospectus  The prospectus is a legal document describing details of the issuing corporation and the proposed offering to potential investors  Contains much of the information in the registration statement  The preliminary prospectus is sometimes called a “red herring”
  13. 13. 4. Present road-show  The road-show is presented to institutional investors around the country  The road-show allows firms to raise interest in the company and thus the price  Allows the firm and its underwriters to gather information from potential purchasers
  14. 14. 5. Price the securities  How much to charge for giving away a part of the firm is very important to the issuers  The securities are priced based on the value of the company and expected demand for the securities  Examples of valuation methods: Net Present Value Earnings/Price ratios
  15. 15. 6. Sell the securities  A full-fledged selling effort gets under way on the effective date of the registration statement  A final prospectus must accompany the delivery of securities
  16. 16. Average IPO returns over last 5 years -50% 0% 50% 100% 150% 200% 250% 300% 2009 2010 2011 2012 2013 Series 1 Series 1
  17. 17. Welcome
  18. 18. WHO ARE WE Just Dial is India’s no 1 local search destination. We service to over 25 million unique users spread across 1300 towns / cities in India. Just Dial, India employs 4,000 employees and has more than 1,00,000 Small & Medium Enterprise advertisers. More than 5 lakhs people call Just Dial every day to get information on Businesses / Services and that too free of cost at any time of the day or night.
  19. 19. WHERE ARE WE Just Dial services is available on PHONE:- 24/7 operator assisted search on a single national local no. 6999 9999 . INTERNET:- www.justdial.com WIRELESS:- search by sms on short code 53999 WAP :- wap.justdial.com
  20. 20. The Initial Public Offering (IPO) refers to the first sale of these shares of stock. Facebook, Inc. had offered 180,000,000 shares of its Class A common stock and the selling stockholders are offering 157,415,352 shares of Class A common stock.
  21. 21. What Is an IPO? The usual customers that purchase IPO stocks are institutional investors, other banks and firms, who buy large blocks of stocks. Those institutions, in turn, sell the shares to individuals.
  22. 22. Let’s look at an IPO scenario… Facebook is valued at $104 billion.
  23. 23. What Is an IPO? Facebook had raised $16billion dollars in capital investment. So, the investment bank gets a 10% stake in Facebook.
  24. 24. The investment bank, working with Facebook, decided that an IPO stock price of $28 to $35 per share would be an ideal starting price. And in the market 337,415,352 Shares issued in IPO.
  25. 25. Facebook’s IPO Looking at the IPO chart shown previously, you’ll see that stock prices for IPOs have a characteristic shape.
  26. 26. DOES IPO AFFECT THE COMPANY’S ABILITY TO INNOVATE  Inventive People Cash Out The primary goal of an innovator is to have a successful exit and thereby cash out. A successful IPO is one lucrative form of exit. The result is that the company's most innovative persons leave the company.  Inventive People Keep Inventing, Elsewhere Here, there is also a departure of the company's most talented innovative types, but the reasons are not simply because of a big cash payday. Rather, innovative types begin to chafe at the more bottom-line driven focus of the company, especially where innovation becomes more incremental than fundamental.
  27. 27.  In the words of Bernstein, “Imagine that you have a brilliant idea.” “It’s more attractive to explore that in a private setting where you are the owner, than in a public firm, where whatever ownership you had is now heavily diluted. They do seem to remain entrepreneurial,” he said — just not at the company their innovations helped build.  Management Clamps Down on Risky, Creative Work The emphasis is on change to the culture of risk-taking that spawned the innovative idea that propelled the company forward.
  28. 28.  Why Build Innovation When You Can Buy It? Companies awash in post-IPO cash seem to have increasing preference to acquire companies rather than to continue to develop and innovate in-house. Indeed, Twitter, even pre-IPO, acquired 10 companies in 2012 alone. [I must confess I find this explanation a bit odd, since presumably acquired companies will also yield patents. In a world where collaborative innovation is all the rage, using IPO-generated funds to overcome the limitations of "non-invented here" seems a potentially good result.]
  29. 29. A few observations are in order here:  The report focuses on post-IPO activity but, over the past few years, most innovative companies exit by acquisition and the like rather than by going public. Indeed, there is more and more discussion that the venture capital industry is in dire straits. If we want to understand the factors that affect innovation, it seems that a complementary study focusing on other forms of exit is needed.  Given this, perhaps the "really next big thing" in this kind of analysis is to develop robust empirical measures that can meaningfully taken into account the variegated countenance of innovation in today's hi-tech world.
  30. 30. There is a danger in equating innovation with patent activity. While I understand that patent data are convenient for conducting empirical research of this kind, in so doing, the analysis may well miss substantial non-patent innovation, both pre and post-IPO. As such, in a social media- mad tech world, patents may be a particularly dicey proxy for measuring innovation.
  31. 31. Disadvantages of the IPO  Expensive A typical firm may spend about 15-25% of the money raised on direct expenses  Reporting responsibilities Public companies must continuously file reports with the SEC/SEBI and the stock exchange they list on  Loss of control Ownership is transferred to outsiders who can take control and even fire the entrepreneur
  32. 32. THE END… Any Questions???

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