Analysis of the Impact of IPOs on the Firm’s Performance
Added on 2023-01-16
11 Pages3146 Words46 Views
|
|
|
Running head: ANALYSIS OF THE IMPACT OF IPOs IN THE FIRM’S PERFORMANCE
Analysis of the Impact of IPOs on the Firm’s Performance:
Name of the Student:
Name of the University:
Student ID:
Author note:
Analysis of the Impact of IPOs on the Firm’s Performance:
Name of the Student:
Name of the University:
Student ID:
Author note:
1ANALYSIS OF THE IMPACT OF IPOs IN THE FIRM’S PERFORMANCE
Executive Summary
The study titled “Analysis of the Impact of IPOs on the Firm’s Performance” is an analysis of the
Initial Public Offerings (IPO) of three ASX listed companies, Z Energy Limited, iSelect Australia
and DroneShield Limited and the impact of the IPOs in the shareholder’s value is identified. The
study focuses on the overall analysis of IPOs in the Australian market by evaluating IPO activities
in the Australian market for a 10 year period, from 2007 to 2017. The study concludes that IPOs are
costly and not profitable for long run, more than 5 years and the effect of under-pricing increases
the cost of equity.
Executive Summary
The study titled “Analysis of the Impact of IPOs on the Firm’s Performance” is an analysis of the
Initial Public Offerings (IPO) of three ASX listed companies, Z Energy Limited, iSelect Australia
and DroneShield Limited and the impact of the IPOs in the shareholder’s value is identified. The
study focuses on the overall analysis of IPOs in the Australian market by evaluating IPO activities
in the Australian market for a 10 year period, from 2007 to 2017. The study concludes that IPOs are
costly and not profitable for long run, more than 5 years and the effect of under-pricing increases
the cost of equity.
2ANALYSIS OF THE IMPACT OF IPOs IN THE FIRM’S PERFORMANCE
Table of Contents
Introduction..........................................................................................................................................3
Use of Capital Raised from IPO:.........................................................................................................3
Effect of IPO in the Firm’s Cost of Equity:.........................................................................................4
Analysis of Market Price during IPO:.................................................................................................5
Analysis of IPO activity on the ASX:..................................................................................................6
Critical Evaluation of Shares Performance:.........................................................................................7
Conclusion...........................................................................................................................................8
References............................................................................................................................................9
Table of Contents
Introduction..........................................................................................................................................3
Use of Capital Raised from IPO:.........................................................................................................3
Effect of IPO in the Firm’s Cost of Equity:.........................................................................................4
Analysis of Market Price during IPO:.................................................................................................5
Analysis of IPO activity on the ASX:..................................................................................................6
Critical Evaluation of Shares Performance:.........................................................................................7
Conclusion...........................................................................................................................................8
References............................................................................................................................................9
3ANALYSIS OF THE IMPACT OF IPOs IN THE FIRM’S PERFORMANCE
Introduction
The Australian Securities Exchange (ASX) is primary securities exchange market of
Australia and have many listed companies, including new and old companies, offering IPOs for
raising capitals. The half year IPO report of 2018, have posted that ASX have listed the second
maximum amount of Initial Public Offerings on 2018. In the study three Initial Public Offerings are
selected in the period between the years, 2007 to 2013, which are Z Energy limited raised IPO of
$660m in 2013 in ASX, iSelect Australia raised IPO of A$215m in 2013 and DroneShield Limited
raised IPO of $0.99 per share in 2014. These IPOs are used to study the impact of capital raising
through IPO in the financial performance of the company.
Z Energy limited is a New Zealand based fuel distributor, and has been listed in ASX as
well as the NZX. Z Energy has its service station in 305 locations across New Zealand and
Australia. iSelect is one of the largest insurance distributing agency of Australia, which provides
different insurance services, including health insurance, life insurance, car insurance and others.
DroneShield Limited engages is a company that provides services related to the technology
securities support founded in 2014, headquartered at Sydney, Australia. DroneShield Limited
develops and provide software and hardware technologies to detect drones and security all over the
world.
Use of Capital Raised from IPO:
iSelect have issued initial public offering of A$215m, in 24th June, 2013, where they have
issued 116.4 million fully paid ordinary shares at $1.85 each, but due to a drop of 15.7% in the
market share, the stock’s value fell to $1.56. The Company provides health insurance comparison
services in websites as its primary service. In between the late 2013 and the early 2014, the
company claims to do a major investment in their data mining and analytics function, by investing
in more in the marketing, which is expected to be extract from the capital raised. In the annual
report 2013-14 of the company, the value of the property, plant and equipment have increased by
Introduction
The Australian Securities Exchange (ASX) is primary securities exchange market of
Australia and have many listed companies, including new and old companies, offering IPOs for
raising capitals. The half year IPO report of 2018, have posted that ASX have listed the second
maximum amount of Initial Public Offerings on 2018. In the study three Initial Public Offerings are
selected in the period between the years, 2007 to 2013, which are Z Energy limited raised IPO of
$660m in 2013 in ASX, iSelect Australia raised IPO of A$215m in 2013 and DroneShield Limited
raised IPO of $0.99 per share in 2014. These IPOs are used to study the impact of capital raising
through IPO in the financial performance of the company.
Z Energy limited is a New Zealand based fuel distributor, and has been listed in ASX as
well as the NZX. Z Energy has its service station in 305 locations across New Zealand and
Australia. iSelect is one of the largest insurance distributing agency of Australia, which provides
different insurance services, including health insurance, life insurance, car insurance and others.
DroneShield Limited engages is a company that provides services related to the technology
securities support founded in 2014, headquartered at Sydney, Australia. DroneShield Limited
develops and provide software and hardware technologies to detect drones and security all over the
world.
Use of Capital Raised from IPO:
iSelect have issued initial public offering of A$215m, in 24th June, 2013, where they have
issued 116.4 million fully paid ordinary shares at $1.85 each, but due to a drop of 15.7% in the
market share, the stock’s value fell to $1.56. The Company provides health insurance comparison
services in websites as its primary service. In between the late 2013 and the early 2014, the
company claims to do a major investment in their data mining and analytics function, by investing
in more in the marketing, which is expected to be extract from the capital raised. In the annual
report 2013-14 of the company, the value of the property, plant and equipment have increased by
End of preview
Want to access all the pages? Upload your documents or become a member.
Related Documents