Initial Public Offerings IPOs

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Initial Public Offerings (IPOs)
R?I?T Financial Management Association
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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)

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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.
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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
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Sounds scary..but there is hope!
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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!

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

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Third Federal is going Public
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Why? (according to management)
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What's inside the Prospectus?
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Who can subscribe for shares?
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Before IPO
After IPO
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Recent Thrift Conversion Performance
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The End Any Questions?