Holding H has subsidiary S1, which wants to do IPO. Holding H also has subsidiary S2, S3, and S4.
Can Subsidiaries S2, S3 and S4 subscribe the IPO of Subsidiary S1 (basically, their sister company).
Of course the Subsidiaries S2, S3 and S4 comply with minimum time of doing business, and required equity to participate on IPO.
I see players with multiple subsidiaries cross-owning shares. That Subsidiary S2 (of Holding H) can buy shares of sister company S1 (also subsidiary of Holding H) on Stock Market is a given fact. Question is whether the Subsidiaries S2, S3, and S4 can also subscribe to IPO (basically do the IPO in-house)?
Nope.
Edit for more information: I already tried. Didn't work.
It is basically a mean to avoid price manipulations, as one might drive the IPO price this way.
Nope.
Edit for more information: I already tried. Didn't work.
Hi,
was it not possible for a subsidiary to support the IPO of another subsidiary ? Or was it not possible for a subsidiary to support the IPO after your holding already ordered shares ?
I ask because some time ago an alliance colleague asked to support his IPO. I subscribed with one holding, but when I tried to also subscribe with my other holding, the system refused and said it was considered cheating.
Jan
Sorry for not being clear. What I was unable to do is as follows:
Holding Company has two subsidiaries. Sub 1 and Sub 2. I decided to IPO with Sub 1. Sub 2 could not participate in the IPO of Sub 1.
Also, something else I found out doing the IPO:
Holding Company A owns Sub 1 and Sub 1 goes through IPO. Holding Company B (run by someone else) subscribes to IPO of Sub 1. Now, Sub 3, owned by Holding Company B, goes through IPO. Holding Company A cannot subscribe to Sub 3's IPO, and if I remember correctly, neither can Sub 1 or Sub 2 (from the above example).
If that was too confusing, it went something like this: I ran an IPO with my subsidiary, KFW Airlines. I asked others to invest, and many did. One of them was Eureka Airlines. When Eureka went IPO later, I could not participate in his with any of my companies. The game wouldn't allow it.
If that was too confusing, it went something like this: I ran an IPO with my subsidiary, KFW Airlines. I asked others to invest, and many did. One of them was Eureka Airlines. When Eureka went IPO later, I could not participate in his with any of my companies. The game wouldn't allow it.
As I was investigating about IPO's, I ran across an article on forums here (cannot remember specific link) saying cross ownership was not allowed because it could create liquidation problems (e.g. liquidation of one could liquidate the other one). Buying on market or subscribing would be the same result IMHO in such case. It makes sense. If A has subsidiary AS, and B has subsidiary BS (no B.S. though :) ) if AS owns BS it could acquire majority in BS, that is no problem, but if BS acquires majority in AS, and then when EITHER of the two liquidates, it would liquidate the other one as well. It would become chicken/egg problem.