Managing Finance - IPO Analysis and Share Price Performance

Running head: MANAGING FINANCE
Managing Finance
Name of the Student:
Name of the University:
Authors Note:

MANAGING FINANCE
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Table of Contents
Introduction:...............................................................................................................................2
a. Understanding the considerations that were taken by the organisation while conducting the
initial public offerings:...............................................................................................................2
b. Depicting the change in the cost of equity of the company after the initial public offerings:
....................................................................................................................................................3
c. Detecting whether IPO is influenced by the under-pricing that is present in a capital
market:........................................................................................................................................4
d. Comparing the Australian IPO activity with the Australian Market:....................................5
e. Share price performance of the IPO without dividends for last 5 years:...............................6
f. Share price performance of the IPO with dividends for last 5 years:.....................................8
Conclusion:..............................................................................................................................10
References and Bibliography:..................................................................................................11

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Introduction:
Australia is a thriving nation where companies are relatively conducting initial public
offerings for gathering all the relevant capital to increase their cash balance and support
future endeavors. The actions that are taken by the organizations together the relevant
funding for their operations are IPOs that are conducted by underwriter in the capital market.
Australia has one of the biggest stock market in the world, which allows international
investors to increase their exposure in the market and select investments that has low risk and
high returns. The report directly evaluates the significance of IPOs that is conducted in the
capital market by organizations while detecting the relevant purpose for such fund the
analysis also allows the organization to determine the changes in its equity cost. The analysis
on the overall initial public offering activities in Australia is conducted on 10 years to
understand the link between the capital market and the IPOs that were conducted during the
period. Further analysis is provided on the overall return generation capabilities of the IPOs
that were conducted in 2013.
a. Understanding the considerations that were taken by the organisation while
conducting the initial public offerings:
Company Purpose of the Fund
Hotel Property Investments
The main purpose of the fund was to achieve relevant
listing on the basics market and adequately access the
liquid capital market of Australian securities. Moreover, it
would also allow the Hotel Property Investment
organization to benefit from the increased profile and
transparency, which increases from the listing of an entity
in the capital market. Furthermore, it would allow the
organization to access the capital market and improve
capital management flexibility to its operations, which
would eventually allow the investors to understand the
operations of the organization.
Virtus Health
The management's main purpose for the share issues what
to adequately raise the funds for supporting the overall

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repayment of debt, which needs to be conducted to the
existing shareholders. Furthermore, the additional
flexibility would eventually allow the organization to
pursue growth opportunities and improve the level of
capital market access. Furthermore the analysis indicates
that liquid market in the shares would revolt we allow the
organization to grasp relevant opportunities to improve
which operations in the long run.
Nine Entertainment Corporation
The main aim of the Nine Entertainment Corporation is to
provide a liquid market for its Shares and an opportunity
for Existing Shareholders. The company also intends to
pay off its existing debts, while providing additional
financial flexibility to pursue the growth strategy.
Furthermore, it helps in increasing cash and cash
equivalents, payment of the costs associated, and payment
to SaleCo shareholders.
b. Depicting the change in the cost of equity of the company after the initial public
offerings:
Hotel Property
Investments 2014
Virtus
Health 2014
Nine Entertainment
Corporation
201
4
Rate 12.5% Rate
13.5
% Rate
11.2
%
Close price 2.02 Close price 6.45 Close price 2.2
New dividends 0.088
New
dividends 0.12 New dividends
0.04
2
Equity cost 16.9% Equity cost
15.36
% Equity cost
13.1
%
The cost of equity is a relatively depicted in the above table for each of the IPS that is
analyzed in the report. However, the cost of equity is relatively derived for the period of 2014
after one year of the operation that was conducted by the organizations conducting IPO is
used in 2013. The calculations that is used for deriving the cost of equity relatively needs
adequate data, which was not provided before the initial public offerings conducted by the
organizations (Yung & Nafar, 2017). Hence, the improvement in the overall cost of equity
directly indicates the level of changes that is required by the management to support future