An Initial Public Offering or IPO is the occasion when a company’s shares are issued to the public for the first time. It marks as one of the most exciting events in the life of a company, providing new opportunities for the business, its managers and for future investors.
It is very important to know the basics about Initial Public Offering. It’s not as complicated as you think. I hope this personal experience of buying an IPO of WILCON DEPOT will give you light about IPO.
Initial Public Offering or IPO: The Basics
1. The Company
For the sake of learning let us take WILCON DEPOT as an example to explain very well the Initial Public Offering or IPO Basics. It is the First IPO of the year.
OUR HUMBLE BEGINNINGS
The four corners of the first Wilcon Builder’s Supply branch were built along Quezon Avenue in 1977. It carried an extensive array of the latest building and finishing materials from international and local markets. A few years after its successful yet humble inception, more and more branches were established across the Metro and in various provinces in the country.
In 2003, its sister company, Wilcon Builder’s Depot was launched with the first outlet in Las Piñas, boasting a bigger expanse, complete selection of products and unsurpassed services. Through the years, it continued to expand and provide home-building solutions to Filipino homebuilders.
To date, Wilcon Depot and Home Essentials has a total of 17 branches spread all over the Metro and 21 in Provinces.
It has been the company’s goal to offer consumers not only with quality products, but also, with utmost customer satisfaction. Wilcon revolutionized the construction-supply industry as it committed itself to providing convenient shopping and excellent services such as air-conditioned shops, ample parking spaces, coffee shops (for depot outlets), delivery services, interior design consultation, recreation corner for children, tile-cutting services, product installations and repairs. These have made Wilcon a household name and a pioneer of the construction-supply industry for the past 39 years.
Company Profile from their own website, click here to visit: WILCON DEPOT
In other words, it is not easy to make your company public, you must have a strong foundation.
2. The Offer Price
How then the company’s offer price is computed? Here is the explanation: Wilcon sold 1,393,906,200 shares at P5.05 apiece, at the lower end of the guided range of P5-5.68 apiece, to give investors a healthy upside after listing. The offer shares represent 34% of the company’s outstanding capital.
3. How To Buy
Your stock broker will make an offer as shown in the figure above. For COL Financial customers, they will see the offer at the opening home screen of their portfolio. There are 2 options on how you can join or buy on the IPO: Through “Local Small Investors or LSI” and Broker Subscriptions. In my case, I was able to buy through Broker Subscriptions. COL Financial customers were given the chance to buy at least 1,000.00 shares. If you are one of the lucky customers to you will received a FINAL status which means…
FINAL = The approved shares is the actual number of IPO shares that you will receive. The corresponding total value will be deducted from your account balance. As soon as the shares are received from COL Financial, they will be credited to your account.
4. The Proceeds of the IPO
When you buy shares of stocks of the company, you become part owner of the company and they will use your money for their business. In return, when they get profit, their share prices goes up as well as the money in your portfolio.
Proceeds from the IPO will be used to bankroll store network expansion, debt retirement and general corporate purposes. Meaning, the company will use your money for these purposes and reward you when their share prices goes high and through dividends later on.
That’s why it is very important to monitor the status of the company after they become available in the listed companies. Whether they are using the money well or not.
When a company is accepted to be listed and go on public, it is a defining moment for them.
There is no assurance that buying an IPO is a sure win.
I strongly suggest you only use extra money in joining IPO subscriptions.
Continually observe the status of the company when it goes live on the ticker.
If there is no guts, there is no glory. So, one day you might want to try buying an IPO.
I hope you understand the Basics of an Initial Public Offering or IPO. This is a short explanation with the thought that it might help you decide in the future regarding IPO.
If you have any questions, clarifications or suggestions, feel free to message me using the contact form or comment below.
Thank you very much.
As always, keep on learning and earning soon!
Excerpts from BW Online, read it here: BUSINESS WORLD Online
Update on WILCON, a short video from Entrepreneur