Financial Analysis: Australian IPOs Performance (2007-2013)

This report evaluates the performance of companies after undergoing an Initial Public Offering (IPO) on the Australian Securities Exchange (ASX). It examines three companies from different sectors between 2007 and 2013, analyzing the impact of IPOs on their cost of equity and share price growth over a five-year period. The study calculates the cost of equity before and after the IPO, revealing an increase post-IPO. It also assesses the underpricing of IPOs and finds that share prices often decrease in the long term, primarily due to overvaluation at the time of the IPO. The report uses annual reports and other sources to evaluate how the funds raised from the IPO were used, highlighting instances where funds were allocated to viable investment projects and working capital. The findings indicate that while IPOs can raise significant capital, they also come with increased costs and potential long-term performance challenges, making it a crucial decision for companies to consider carefully.