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Initial Public Offerings IPOs

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RIT. Financial Management Association. Initial Public Offerings (IPO's) ... 20% average first day gain. 25% first quarter average gain. ... – PowerPoint PPT presentation

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Title: Initial Public Offerings IPOs


1
Initial Public Offerings (IPOs)
R?I?T Financial Management Association
2
Long-term Financing Options for Firms
  • Corporate Debts
  • Private Debt (banks)
  • Public Debt (bonds)
  • Common Stock
  • (Pecking Order Shareholders at greatest
    risk if firm goes bankrupt)

3
What is an IPO?
An initial public offering (IPO) is the first
sale of a corporation's common shares to
investors on a public stock exchange. The main
purpose of an IPO is to raise capital for the
corporation. While IPOs are effective at raising
capital, being listed on a stock exchange imposes
heavy regulatory compliance and reporting
requirements (Wikipedia).
Sarbanes-Oxley has discouraged IPOs in recent
years.
4
IPOs can be risky business!
An underwriter determines the size and
price-per-share of the offering (for a fee of
course). The investor must ask if they are
paying the right price or not for the substantial
risk they are undertaking.
Sometimes investors make Sometimes
investors lose
5
Sounds scary..but there is hope!
6
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7
What is a Thift?
  • It is a savings loan (bank). The depositors
    are the owners.
  • The goal is to find thrifts that are about to go
    public.
  • From Jan. 2001 through Sept. 2005 69 SLs went
    public.
  • 20 average first day gain.
  • 25 first quarter average gain.
  • An example of a thrift conversion I participated
    in.
  • There are roughly 698 depositor-owned thrifts
    that will probably go public sooner or later!

8
  • I invested in a Certificate of Deposit back in
    2005 in Third FederalI got lucky!

9
Third Federal is going Public
10
Why? (according to management)
11
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12
What's inside the Prospectus?
13
Who can subscribe for shares?
14
Before IPO
After IPO
15
Recent Thrift Conversion Performance
16
(No Transcript)
17
The End Any Questions?
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