SHARE TRADING

An Initial Public Offering (IPO or float) is a process whereby a company raises equity capital by offering shares to the public for

the first time.  As an investor you may be able to access shares in an IPO, either directly or via your broker.  Following an IPO,

the company is ‘listed’ on the sharemarket, and its shares can be traded.

 

 

Initial Public Offerings (IPOs)

Initial Public Offerings (IPOs)  http://explore.westpac.com.au/#!/s=share-trading&t=2458

© Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.

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How IPOs work

Prospectus

In order to raise equity capital via an IPO, a company must first prepare a prospectus and lodge

it with the Australian Securities and Investments Commission (ASIC).  The prospectus must

contain all the relevant information investors would require to make an informed judgement

regarding investment in the company.

Applications

The company will decide to whom it wishes to offer its shares.  Some companies will allocate a

portion of the shares on offer to customers, institutional investors, or to the general public.  If

entitled to apply for shares, you can do so by completing the application form in the prospectus

(or via your broker if they are participating in the IPO).

Allocations

Once applications are received, the company and its advisers will confirm allocations.  If an IPO is

‘oversubscribed’, it means that the company has received applications for more shares than it has

on offer.  In this case, your application may be subject to ‘scale back’, and you may receive fewer

shares than what you applied for or even none at all.  

Listing

When allocations have been made and the application money received by the company, the new shares will then be ‘listed’

on the sharemarket.  Once listed, the company’s shares can be traded as normal, and their price can rise or fall depending

on market conditions and supply and demand for the shares.

Rights issues

A ‘rights issue’ is where an already listed company seeks to raise additional equity capital from

existing shareholders. Shareholders are offered additional shares in the company on a

predetermined basis; for example, one additional share for every 10 held. Rights issues are normally

offered at a discount to the prevailing market price. Participation is optional.

 

Initial Public Offerings (IPOs)  http://explore.westpac.com.au/#!/s=share-trading&t=2458

© Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.

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Placements

A ‘placement’ is where an already listed company seeks to raise additional equity capital from a

number of selected investors. Placements are typically made to institutional investors such as fund

managers, but can also be made to clients of stockbroking firms.  Placements are normally offered at a

discount to the prevailing market price.

 

More about share trading

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share trading service

Visit www.westpac.com.au

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Things you should know

This information is general advice only and does not constitute any recommendation or personal advice. It is current at the time of publication (1st October 2013), and is subject to change. It has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on the information, consider its appropriateness, having regard to your objectives, financial situation and needs. Consider obtaining personalised advice from a professional financial adviser and your accountant before making any financial decisions in relation to the matters discussed in this document. 

© Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714. More about Westpac Online InvestingShare trading with Westpac Online Investing is a service provided through Westpac Securities Limited ABN 39 087 924 221, AFSL 233723 ("Westpac Securities") is a service provided by Australian Investment Exchange Ltd ABN 71 076 515 930, AFSL 241400 ("the Participant"), a participant of the ASX Group and Chi-X Australia. The Participant is not authorised to carry on business in any jurisdiction other than Australia. Accordingly, the information contained in this website is directed to and available for Australian residents only. Investment in securities and derivatives involves risk. Share prices rise and fall. The payment of dividends and the return of capital are not guaranteed. This information has been prepared without taking account of the objectives, financial situation or needs of any particular individual. For this reason, you should consider the appropriateness of the information, having regard to your objectives, financial situation and needs and, if necessary, seek appropriate professional advice. You should also read the Financial Services Guide ("FSG"), which provides you with information on the services the Participant and Westpac Securities can provide. In addition, you should read all relevant Product Disclosure Statements or disclosure documents. You can access the FSG via westpac.com.au/onlineinvesting. The Participant tries to ensure that the information provided is complete and correct but readers are advised to check any important item(s) with us before making any decisions.

Initial Public Offerings (IPOs)  http://explore.westpac.com.au/#!/s=share-trading&t=2458

© Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.

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