Corporate Finance: Analysis of 2018 IPOs - Aston Martin & Mind Gym

This report analyzes the IPO underpricing strategies employed during the 2018 IPOs of Aston Martin and Mind Gym. It explains the rationale behind underpricing, which is primarily to ensure successful share issuance by attracting investors. The report details the price evolution of both companies during their issue periods, noting the initial decline in Aston Martin's share price and the fluctuations in Mind Gym's. A comparison of their stock performance against the FTSE 100 index reveals a declining performance for both, with Aston Martin's decline being more pronounced. The UK IPO market's role in capital raising is also highlighted. The analysis indicates that while underpricing appeared to benefit Mind Gym, it did not prevent an initial price decline for Aston Martin.

Running head: CORPORATE FINANCE
Corporate Finance
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

1CORPORATE FINANCE
Table of Contents
Explaining why underpricing are conducted by providing adequate explanation regarding the
analysis of the 2018 IPOs of Aston Martin and Mind Gym:...........................................................2
Providing information regarding the prices of the two companies evolved during the issue
period:..............................................................................................................................................3
Comparing the stock performance with index and depicting about IPO market in UK:.................4
References and Bibliography:..........................................................................................................6

2CORPORATE FINANCE
Explaining why underpricing are conducted by providing adequate explanation regarding
the analysis of the 2018 IPOs of Aston Martin and Mind Gym:
The underpricing structure is mainly used by the organization for completing the share
issues successfully, as it motivates the investors to buy shares of the organization during the
issue. The underpricing method has certain significance, which allows the organization to gather
the required level of capital to supports its expansion and other plans. The occurrence of
underpricing is essential for the organizations to successfully complete their IPO without any
kind of halt and problems. The initial public offering is mainly conducted with the help of a
merchant banker, who orchestrates the whole IPO of an organization, which ensures the
completion of the share transfer. The underpricing of the shares mainly allows the merchant
banker to adequately attract investors who will be keen on investing for a long term in the
company.
Moreover, the analysis of Aston Martin IPO directly portrays the information regarding
the IPO offering, which was placed between £18.50 to £20.00 a share. However, the start of the
IPO resulted in a decline of the share to £17.75 from an opening price of £19.00
(Uk.finance.yahoo.com, 2019). Moreover, the IPO of Mind Gym provides relevant information
regarding the share price that was listed for the investors. In addition, the IPO share price for
Mind Gym was at 146.00 pence per share, which has changed due to the alterations in the
demand. The overall share price of the organization on 28 June 2018 has mainly changed from
170 pence opening price to a closing price of 177.50 pence.

3CORPORATE FINANCE
Providing information regarding the prices of the two companies evolved during the issue
period:
Particulars (Mind Gym) Value
Share price Opening 170.00
Share price Closing 177.50
Share price High 190.00
Share price Low 170.00
The above table provides information regarding the share price movement of Mind Gym
during the IPO date, which is 28-06-2018. The share price opens at the value of 170.00 pence,
which nearly faced a high of 190.00 pence during the day before closing at the value of 177.50
pence. This price action movement is due to the presence of underpricing, which is conducted by
the organization to increase the demand for the shares. The underpricing method has mainly
helped in creating demand for the shares of the organization, which in turn raised the level of
share price from 170 pence to 190 pence before closing at 177.50 pence
(Londonstockexchange.com, 2019).
Particulars (Aston
Martin)
Value
Share price Opening 1810.60
Share price Closing 1800.00
Share price High 1834.80
Share price Low 1754.40
The share price of the organization has mainly declined from the opening price of
1810.60 pence, which has mainly changed over the period. In addition, the changes in the current

4CORPORATE FINANCE
share price is seen during the 04-10-2018, where the share price has changed from a high of
1834.80 to a low of 1754.40. This alterations in the current share price during the IPO has mainly
indicated that the share price of the company has mainly changed during the day, which resulted
in a lower closing price of 1800 pence. Therefore, it might be understood that the underpricing
method did not work in the current IPO initiation, which directly reflects wrong information to
the organization (Amlcorp.blob.core.windows.net, 2019).
Comparing the stock performance with index and depicting about IPO market in UK:

5CORPORATE FINANCE
Figure 1: Share price comparison with the FTSE 100
(Source: Uk.finance.yahoo.com, 2019)
The performance of both the companies has been declining in comparison to the FTSE
100, which can be seen in the above figure. In addition, the performance of Mind Gym was in
accordance with the FTSE 100, while the performance of Aston Martin was declining in
comparison to the Index. The performance of both the companies has showed a reducing
performance in comparison to the FTSE 100 index.
The IOPO market of UK is considered to be one of the most viable sources for companies
to raise the level of capital to support their operations. The UK IPO market needs adequate
information from the companies before initiating the IPO, which increases the trust of investors
and ensures a successful completion of the IPO.

6CORPORATE FINANCE
References and Bibliography:
Amlcorp.blob.core.windows.net (2019). Amlcorp.blob.core.windows.net. Retrieved 13 February
2019, from https://amlcorp.blob.core.windows.net/default-storage/docs/default-source/
documents/aml---prospectus.pdf?sfvrsn=6c624242_2
Londonstockexchange.com. (2019). Londonstockexchange.com. Retrieved 13 February 2019,
from https://www.londonstockexchange.com/exchange/news/market-news/market-news-
detail/other/13691235.html
Uk.finance.yahoo.com. (2019). Uk.finance.yahoo.com. Retrieved 13 February 2019, from
https://uk.finance.yahoo.com/quote/AML.L/history?
period1=1538505000&period2=1538677800&interval=1d&filter=history&frequency=1d
Uk.finance.yahoo.com. (2019). Uk.finance.yahoo.com. Retrieved 13 February 2019, from
https://uk.finance.yahoo.com/quote/MIND.L/history?
period1=1530037800&period2=1530210600&interval=1d&filter=history&frequency=1d