When any private organization wants to grow but lacks capital required for it, instead of taking debt from banks, it decides to go public and sell shares. It goes to Investment Bank to set up IPO. IB arranges for IPO where shares are divided as per the capital requirement and in this way public buys those shares and business gets money. Through this training we shall learn about fund raising options IPO, FPO, the role of investment banking in the same and IPO modeling.

• Introduction - Ways of raising capital

• What is an IPO and the IPO Process

• Why do companies go public ?

• IPO Valuation techniques

• DCF Valuation

• EV/EBITDA

• Comparable method

• Venture Capital method

• Follow on public offers

• Conclusion

An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance for the first time. An IPO allows a company to raise equity capital from public investors. The transition from a private to a public company can be an important time for private investors to fully realize gains from their investment as it typically includes a share premium for current private investors. Meanwhile, it also allows public investors to participate in the offering.

The first step in the IPO process is for the issuing company to choose an investment bank to advise the company on its IPO and to provide underwriting services. Underwriting is the process through which an investment bank (the underwriter) acts as a broker between the issuing company and the investing public to help the issuing company sell its initial set of shares. After the IPO is approved by the SEC, the effective date is decided. On the day before the effective date, the issuing company and the underwriter decide the offer price (i.e., the price at which the shares will be sold by the issuing company) and the precise number of shares to be sold. Deciding the offer price is important because it is the price at which the issuing company raises capital for itself. After the issue has been brought to the market, the underwriter has to provide analyst recommendations, after-market stabilization, and create a market for the stock issued. The final stage of the IPO process, the transition to market competition, starts 25 days after the initial public offering, once the “quiet period” mandated by the SEC ends.