Hey everyone!
I have an airline called Nagoya Wings based out of Nagoya, Japan. We're doing pretty well and I want to jumpstart our success with some exra money by putting my airline on the market. I was wondering, how long is it smart to wait to start an IPO? Is two weeks too soon? Please leave what you think below. Thanks.
Just so you know: You won't jumpstart your company Nagoya Wings with an IPO. The money you raise with the IPO will go to your holdings bank account. And once you have your subsidiary on stock market, you can't transfer any money to it. So the only thing you can use your IPO money for is to start a second subsidiary.
Just so you know: You won't jumpstart your company Nagoya Wings with an IPO. The money you raise with the IPO will go to your holdings bank account. And once you have your subsidiary on stock market, you can't transfer any money to it. So the only thing you can use your IPO money for is to start a second subsidiary.
That's not correct. The IPO money will go to the company being IPO'ed
That's not correct. The IPO money will go to the company being IPO'ed
Hmm, thats very interesting!
That's not correct. The IPO money will go to the company being IPO'ed
When do you think it is best to start the IPO?
When do you think it is best to start the IPO?
Anytime that you’re making a consistent profit. Investors won’t invest in an enterprise that shows potential to fail, because if the enterprise collapses (or is reset/closed by the player), we have to devalue our stock portfolios and hope the liquidation will recoup our initial investment.
That's not correct. The IPO money will go to the company being IPO'ed
Nesherius (and DBreslow): Lets say we have a holding (no planes) and one subsidiary which is the actual airliner with planes. The subsidiary is 100% owned by the holding as it is not on the market yet. Than we take the subsidiary to the market. 20% of the shares of the holding are sold to other investors. After the IPO, the holding owns 80% of the shares in the subsidiary and other investors 20%. Since shares of the holding are sold, the money earned with the IPO of the subsidiary is added to the bank account of the holding, not onto the bank account of the subsidiary. This means that the subsidiary, which has the planes and is making the money, does not profit from an IPO. Actually, the subsidiary has to pay 15% dividend each week to its shareholders. So it only costs the subsidiary money!
I might not be an expert as I'm still quite new to the game but considering the limitations an IPO entails (i.e. no asset management) and the relatively small revenue (at least in an early stage - I play on ellinikon) I already answered your question to myself: Best time to make an IPO is... never.
At the moment I can't think of any reason why I would bring one of my subsidiaries to the stock market.
I saw a lot of airlines starting an IPO on ellinikon which are still worse off than I am without it. They maybe generated a short 'high' income of 6-8 millions - something I make in 3 or 4 days. But now they can't transfer funds via asset management anymore, are reliant on the market price when selling more shares and totally opened their books to the public (at IPO) or the shareholders (after IPO).
So imo the cons outbalance the pros big time.
If I got something wrong or forgot about anything I'd be gladly disabused. :)
I might not be an expert as I'm still quite new to the game but considering the limitations an IPO entails (i.e. no asset management) and the relatively small revenue (at least in an early stage - I play on ellinikon) I already answered your question to myself: Best time to make an IPO is... never.
At the moment I can't think of any reason why I would bring one of my subsidiaries to the stock market.
I saw a lot of airlines starting an IPO on ellinikon which are still worse off than I am without it. They maybe generated a short 'high' income of 6-8 millions - something I make in 3 or 4 days. But now they can't transfer funds via asset management anymore, are reliant on the market price when selling more shares and totally opened their books to the public (at IPO) or the shareholders (after IPO).
So imo the cons outbalance the pros big time.
If I got something wrong or forgot about anything I'd be gladly disabused. :)
Yep - the amount you can earn by an IPO s closely tied to the current value of your company. Companies with a great potential can not simply create a surplus for the opportunity, which is mostly to prevent fraud. This leads to a problematic situation: Either your company is performing well - then there is no need for an IPO as the amount earned by it can easily genereated by your companies revenue in a few weeks OR - your company is in an unstable situation where it requires additonal funds to survive, but this scenario is unlikely to attract investors. Another fact to consider is the advanced reporting that is available to share holders. This reporting includes information such as weekly profits as well the SLF and other data. Buy buying a small amount of stocks (in fact one share is enough) it is relatively easy for competiotors to get access to these statistics.
Nesherius (and DBreslow): Lets say we have a holding (no planes) and one subsidiary which is the actual airliner with planes. The subsidiary is 100% owned by the holding as it is not on the market yet. Than we take the subsidiary to the market. 20% of the shares of the holding are sold to other investors. After the IPO, the holding owns 80% of the shares in the subsidiary and other investors 20%. Since shares of the holding are sold, the money earned with the IPO of the subsidiary is added to the bank account of the holding, not onto the bank account of the subsidiary. This means that the subsidiary, which has the planes and is making the money, does not profit from an IPO. Actually, the subsidiary has to pay 15% dividend each week to its shareholders. So it only costs the subsidiary money!
You have been told you were wrong. You are.
IPO does not transfer holding's share in the subsidiary to investors, it issues NEW shares that the investors buy, and the new shares are equal to 20% of after-IPO company.
Let's say a subsidiary with an equity of 30 million is going IPO. Upon "normal" scenario (no under or over-subscription), , there will be 300,000 shares @ AS$100 owned by holding at IPO time. IPO will issue another 75,000 share @ AS$100, so after the IPO ends the subsidiary will comprise financially 375,000 shares @ AS$100. The original holding will own 300,000 shares and the new investors will hold 75,000 shares. The IPO will raise 7.5 million for the subsidiary (75,000 shares @ AS$100). This money goes to the subsidiary's bank account not to holding! Holding has not so far sold one single share of its original 300,000 shares participation in the subsidiary.
Another fact to consider is the advanced reporting that is available to share holders. This reporting includes information such as weekly profits as well the SLF and other data. Buy buying a small amount of stocks (in fact one share is enough) it is relatively easy for competiotors to get access to these statistics.
Absolutely. And one can use this "feature" to perfectly monitor all the competitors.
So basically an IPO does bring some advantages with it.. just not for the IPO making company but all the others, i.e. shareholders. They can speculate and make money by trading at the stock market and gain information about the companies they desire (when those are listed on the stock that is..).
I'm not too sure if the relatively small amount of cash you generate (non-recurring) justifies these disadvantages.. I doubt it.
@OP: That said, I highly encourage you to make an IPO... but would refrain from doing so myself. ;)
You have been told you were wrong. You are.
IPO does not transfer holding's share in the subsidiary to investors, it issues NEW shares that the investors buy, and the new shares are equal to 20% of after-IPO company.
Let's say a subsidiary with an equity of 30 million is going IPO. Upon "normal" scenario (no under or over-subscription), , there will be 300,000 shares @ AS$100 owned by holding at IPO time. IPO will issue another 75,000 share @ AS$100, so after the IPO ends the subsidiary will comprise financially 375,000 shares @ AS$100. The original holding will own 300,000 shares and the new investors will hold 75,000 shares. The IPO will raise 7.5 million for the subsidiary (75,000 shares @ AS$100). This money goes to the subsidiary's bank account not to holding! Holding has not so far sold one single share of its original 300,000 shares participation in the subsidiary.
Rubio: Than explain me one thing. I'm at Pearls and Ellinikon. When I started playing at Ellinikon I started with a holding - RJI Investment Group and with $10mln in cash. I used $9.990.000 to start my first subsidiary called Fly Canada, based in Toronto. Around September 20 I had an successful IPO with Fly Canada....And now its getting interesting :mellow: : At the time I write this I remember why I thought that the money went to the holding instead of the subsidiary! My idea was that the money of the IPO went to the bank account of my holding and I started, a couple of days later, my 2nd subsidiary called Fly Canada BC, based in Vancouver. But what I actually did was selling additional shares of RJI investment Group owned shares in Fly Canada, to fund the start of my 2nd subsidiary. So my 2nd subsidiary is not payed with the IPO of my first subsidiary but by selling additional shares. And I remember that with the money raised with the IPO of Fly Canada (Toronto), I leased long haul planes for Fly Canada.
@Rubio and Nesherius: You guys are right. I mixed two things up! ^_^