Why Company Go Public

REASON FOR PT. BANK cardinal ASIA, Tbk TO GO frequent INITIAL PUBLIC OFFERING William1140004383 BINUS BUSINESS SCHOOL course STUDI MAGISTER MANAJEMEN BUSINESS MANAGEMENT BINUS UNIVERSITY JAKARTA 2010 heel of Content List of Content2 Definition3 Reasons for lean3 Advantages of an initial commonplace biding5 Disadvantages of an initial crack5 Procedure6 Bank r in totallyy Asia History7 Bibliography9 Definition An initial cosmos oblation (initial offering) or stock market send is, as it sounds, the frontmost sale of a companionships grapples to the in the habitual eye(predicate) and the angle of inclinationing of the sh argons on a stock commutation. In the UK, initial habitual offerings atomic number 18 often referred to as floatation.initial offering was originally an Ameri go off term only is now used across all world markets. The partings offered may be exist ones held privately, or the lodge may takings invigorated sh ares to offer to the humankind. Companies choose to offer plows to the public to lay out advanced working bully for the order to widen the shareholder institute of the company to give the shareholders a fluent market in which to trade their share achieve the publicity that a public leaning brings. Companies might choose to list on the market by a private placing of shares to institutions rather than a public offering.There shake off been several(prenominal) online f dance bandation sometimes referred to as EPOs (Electronics in the public eye(predicate) Offerings). umpteen companies that undertake an IPO similarly request the assistance of an enthronement banking sign of the zodiac acting in the capacity of an insurance underwriter to help them correctly assess the tax of their shares, that is, the share expense. Whoever is elevation the cash, the member of flotation is arduous, incriminates crucial time commitments from the companys steering and advisor (investment bankers, stockbrokers an d solicitors amongst opposites), and is not cheap.This cause is expended in order to raise the capital posit at a price that keeps both the vendor and the purchaser of the shares happy. Reasons for listing When a company lists its securities on a public exchange, the money paid by investors for the newly return keyd shares goes directly to the company (in telephone circuit to a later trade of shares on the exchange, where the money passes between investors). An IPO, in that locationfore, allows a company to tap a wide kitten of investors to provide itself with capital for future growth, re overcompensatement of debt or working capital.A company wandering common shares is never call for to repay the capital to investors. Once a company is listed, it is able to issue supererogatory common shares via a secondhand winding offering, thereby again providing itself with capital for expansion without incur any debt. This ability to quickly raise large amounts of capital from th e market is a key rationalness some companies test to go public. The three main provoke parties in an IPO (the vendor, the company, and the investor) have completing objectives. The Company impart want to * maximize offspring * Build broad and unchanging ownership bum Raise its write * Facilitate future fund raising and possibly future learnings * Ensure that there is a good liquidity in standby market trading * Be seen as launching a happy IPO. The Vendor, or selling shareholder, wants to * increase proceeds * Maximize value of retained quest/share price performance * Be seen as part of a roaring transaction Investors will want to * Maximize share price return (short and long-term) * exsert and diversify portfolio * Accumulate a typeset not easily found in the secondary market Companies undertake an IPO for one of two discernments To raise capital for the companys use (a immemorial offering). * To raise funds for the alert shareholders (including judge capital ist and authoritiess, as in privatizations, etcetera ) (a secondary offering). The terms radical offering or primary issue and secondary offering or secondary issue are often used to illuminate the recipient of the proceeds. Proceeds from a primary offering go to the company it creates and issues new shares for sale to the public. Secondary offering sells existing shares to the public. Many IPOs combine primary and secondary offerings.In general, capital raising IPOs are undertaken in order to * Raise hard cash in order to expand the profession of the company, or * Reduce the debt levels (leverage or gearing) of the company. The decisiveness to go public for many companies is a strategical decision, not just a fund raising decision. The IPO process can be a accelerator pedal for developing the companys scheme much fully. It can also be seen as the final step in the pecuniary development of a company. Reasons for secondary sales include * Sale by entrepreneur * Successio n * Tax and another(prenominal) personal reasons * Cashing in * Sale by professional investors Venture capitalists and private investors pursuit an exit * Reverse LBOs * Funds required by parent company/ major shareholder * Demutualization and introductions * Privatizations of state- owned enterprises. * Raising funds for the treasury. * awful private market disciplines on concern and workers thereby increasing efficiency and supporter to clients. * Fostering a shareholders democracy. * Winning votes (although this is not explicitly stated). Advantages of an IPO The advantages of going public include * Liquidity and increased share price * Management and employee motivation deepen image/prestige * Access to option source of capital * Ancillary benefits Advantages of commit internationally * More securities and industries to choose from compensate large markets dont have shares in every sector. * Greater returns many emerging markets provide higher grade of return than do more produce markets and some markets may not be as efficient as others, allowing professional investors an advantage. * Reduction of risk not all national stock markets advance (or decline) at the same time. Therefore international variegation may reduce risk in an investors portfolio. Liquidity some institutions contract significant liquidity in their portfolios, which can only be met by commit in the largest global companies. * Single European currency many investors now facial gesture at the Eurozone as a wiz country for portfolio purposes. An investor in France, for example, no lasting considers France to be his root market the spotless Eurozone is now treated as the home(prenominal) market. Disadvantages of an IPO There are several disadvantages to completing an initial public offering, videlicet * Significant legal, accounting and marketing cost Ongoing requirement to disclose financial and business information * Meaningful time, attempt and attention required of senior vigilance * Risk that required funding will not be raised * habitual dissemination of information which may be useful to competitors, suppliers and customers Disadvantages if selling to and maintaining an international investor base * Cost and complexity * Increased revelation requirements * Flow rearwards Procedure The new issue process has five stages * bodily issues Some of general issues that company read to take care The corporate social organisation and domicile will need to be mulish. * Determining the timetable is also important. * Determining rank and file of the board of directors. * Employee participation. * Shareholder agreements and lockups. * Offering organise The main listing choices of offering body structure that face a company are * Which local exchange should it choose? * Should the company bypass the local market totally? * Should the issuer consider multiple listings in its home market and on an international exchange? * Regulation and docu mentation trade, pricing, and parcelling In general marketing process consists of * Pre-marketing * ontogeny the investment case * Preparing the market * Preparing the management * Initial research published (where permitted) * Marketing * Setting the price range * filling the preliminary prospectus * Sales brief * Roadshow and one-on-one * Sales/research consume * adjudge building * Pricing and allocation * Setting the price There are three approaches to the pricing of an offering * Book building * Fixed price * auction/render offer * Allocation * stabilisation * AftermarketThe first question that needs to be answered when a company wants to do IPO is is the company ready to go public? Whether a company ready or not to go public is not determined by age, but determined on the ability to present a compelling investment case, which is made up of many components, chief among them being * readiness of management * Financial track insert * Industry prospects and growth potenti al * set within industry/competition * valuation/comparative value. The offering process for an IPO will be necessarily more complex than that of a secondary offering. Many of the strategic issues that need to be intercommunicate only apply to companies issuing shares to the public for the first time. * Preparing the documentation is easier IPOs generally involve one or more investment banks known as underwriters. The company offering its shares, called the issuer, enters a contract with a slip by underwriter to sell its shares to the public. The underwriter then(prenominal) approaches investors with offers to sell these shares. The sale (allocation and pricing) of shares in an IPO may take several forms. joint methods include * Best efforts contract blotto commitment contract * All-or-none contract * Bought negociate * Dutch auction Bank underlying Asia History PT. Bank substitution Asia was first found on 21 February 1957 as Bank Central Asia NV. A lot of things have ch okeed since then the most significant of all being perhaps the Asiatic monetary crisis in 1997. Here are the histories of BCA from 1997 until BCA do the IPO in may 2000 * 14-15 November 1997, BCAs customer makes a peak of BCA because Soedono Salim false name Liem Sioe Liong, its majority shareholder, rumored dead. The new batch subsides after Liem appear in public. 18 May 1998 until beginning of June 1998 BCAs customer back to panic after the riots of May, so do the rush. As a result, BCA close customer withdrawals, via cashier Rp. 5 billion, Rp. ergocalciferol thousand via ATM Silver, and ATM luxurious is Rp. 1 million. * 28 May 1998, BCA officially became patient of Badan Penyehatan Perbankan Nasional (BPPN). Bank of Indonesia scoot funds up to 200 percent of BCAs capital. Badan Penyehatan Perbankan Nasional (BPPN) took over the authority of directors and commissioners of BCA and form a team led by handler of Bank BRI, DE Setiyoso. 25 August 1998, presidency announced that the deadline of completion of Bantuan Liquiditas Bank Indonesia (BLBI) by the old owner is 21 kinsfolk 1999. * 22 September 1998, Head of BPPN, Glenn MS Yusuf, states that Salim Group accept the obligation to pay Rp. 35 trilliun to his side. With this agreement, the shares of the Salim Group transferred to BPPN with its cash and property. The administration has 92. 8 percent shares of BCA and the rest is owned by Salim Group and several other parties. * 29 September 1998, Head of BPPN, Glenn MS Yusuf, said the government will inject capital considered sufficient to meet the form of healthy banks.This funding will be converted into shares of government. * 23 April 1999, BPPN said government would sell its share in BCA to the public and after that the shares will be offered to the strategic investors. * 4 February 2000, BCA register its plan for sell the shares to Badan Pengawas Pasar Modal. BCA plans to sell 42 percent of its share. * 22 February 2000, BPPN suddenly delaying the implementation of BCA share offering to the fiscal year 2000 (April December 2000) with reason that the BCAs IPO preparation need more time. 3 March 2000, BPPN stated that BPPN unsure to aspire Rp. 3 trillion from these stock offering. * 10 April 2000, President conductor of BCA, DE Setijoso, declared the maximum number of shares of BCAs share that offered by Badan Penyehatan Perbankan Nasional (BPPN) reached 883. 2 million shares. While the range of BCAs share on IPO ranges from Rp. 1. 350 Rp. 1. 750 per sheet. It means, the maximum acquisition target of BPPN reached Rp. 1. 5456 trillion about half(prenominal) of the target. * 27 April 2000, BPPN officially returns BCA from BPPN to BI.With this return to BI BCA, then BCA became the first bank that came back from recovery state of BPPN. From the history of BCA from 14 November 1997 to 27 April 2000, we can conclude that reason for BCA to go public is because of the crisis that happened in BCA that happen 2 times that cause d by 1. Soedono Salim alias Liem Sioe Liong, its majority shareholder, rumored dead. 2. The riots in May 1998. So that BCA need to go public to get fund injection to recover the financial condition of BCA. Bibliography Geddes, Ross. IPOs and equity offerings. Burlington Butterworth-Heinemann, 2003. financeglossary Great Investor Network. 7 January 2011 BCA PT. Bank Central Asia. 7 January 2011 treadinteractive. com Perjalanan BCA sejak 1997 Tempo Interaktif 26 Februari 2002. 7 January 2011 Initial common Offering Wikipedia. 7 January 2011 Bank Central Asia Wikipedia. 7 January 2011