Managing Finance

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

MANAGING FINANCE
1
Table of Contents
Introduction:...............................................................................................................................2
a. Analysing the IPO activity and determining how the funds will be used by the organisation:
....................................................................................................................................................2
b. Discussing the relevant change in the cost of equity of IPO:................................................4
c. Highlighting the arguments on the extent of under-pricing, this differs from industry to
industry:......................................................................................................................................5
d. Analysing the changes in IPO activity of Australia from 2007 to 2017 and comparing the
activity with the economic growth:............................................................................................6
e. Critically analysing the performance of the IPO for the next 5 years after the issue:............7
f. Critically analysing the performance of the IPO after dividend is added for the next 5 years
after the issue:............................................................................................................................8
Conclusion:................................................................................................................................9
References and Bibliography:..................................................................................................10

MANAGING FINANCE
2
Introduction:
The IPO analysis has been conducted in the assessment to detect whether under-
pricing occurs in the Australian economy. In addition, the IPO activity of Australian Stock
market is evaluated to detect the changes in the IPOs from 2007 to 2017. The assessment has
also evaluated the change in IPO activities for the period of 10 years and linked it with the
economic condition of Australia. Further evaluation has been conducted on the performance
of the IPOs over the period of 5 years with the ASX index to determine the returns that has
been generated by the investors after investing in the IPO. The overall performance of the
share has been conducted with and without the dividends to determine the actual returns that
are enjoyed by investors.
a. Analysing the IPO activity and determining how the funds will be used by the
organisation:
Company Industry
Date
of
IPO
Amoun
t
Raised
Offe
r
price
Closing price on
first day of
trading
Return on
first day of
trading
Nine
Entertainment
Corporation Media
Dec-
13
$643.3
m 2.05 1.98 -3.41%
Ozforex
Diversifi
ed
financial
Oct-
13
$439.4
m 2 2.56 28.00%
Hotel Property
Investments
Real
Estate
Dec-
13 $279m 2.1 1.94 -7.62%
Compan
y Name
Indus
try
Dat
e of
IP
O
Amoun
t
intende
d to
raise
Amou
nt
actuall
y
raised The purpose of the funds
Nine
Entertain
ment
Corporati
Medi
a
De
c-
13
643.3 $643.3
m
Repayment of debt, payment to SaleCo,
increase in cash and cash equivalents and
additional financial flexibility to pursue the
growth strategy

MANAGING FINANCE
3
on
Ozforex
Diver
sified
financ
ial
Oct
-13 480
$439.4
m
Paying dividend to the existing share holder
and increasing capital management
flexibility
Hotel
Property
Investme
nts
Real
Estate
Jun
-13 279 $279m
Improve capital management flexibility, To
be paid to the Existing Unitholders,
Refinancing of existing debt, Working
capital and Transaction costs
The above table provides information on the initial public offerings that were
conducted 2013 by nine entertainment Corporation, hotel property Investments, and Ozforex.
The table correctly provides information regarding the industry the organizations are
connected to and the returns that were provided on the day of the share issue. The highlight of
the public Offering of Nine Entertainments Corporation was to acquire the capital for
repayment of debts, increasing the cash and cash equivalents, pursuing strategic growth and
improving its financial flexibility. The company aimed to raise 643.3 million from the IPO
and was able to collect the required sum for its operations. During the date of the IPO, share
price of organization declined by 3.41%, where the offer price stood at 2.05, while the
closing price of the day was 1.98.
The IPO also allowed Ozforex to acquire the required capital from its share issue
during December 2013. The company aimed to raise $279 million from its initial public
offering and was able to collect the required fund. Moreover, the company witnessed a hike
in the share value during the day of IPO, where the offering price was at $2, while the close
price was at $2.56, which raised the return for the day to 28%. The IPO was initiated to
support the dividends payments to the existing shareholders and increasing the capital
flexibility of the organization (Asx.com.au, 2019).
Moreover, the IPO of Hotel Property Investments was initiated in June 2013, where
the organization aims to raise $279 million from their share issue, which was collected after