Philippine Stock Exchange


Friday, October 29, 2010

IPO - Initial Public Offering

       Last Tuesday, October 25,2010, "Cebu Pacific was able to raise P23.3B for its IPO or Initial Public Offering by selling 30.66 million primary shares, as well as 155.98 million secondary shares, owned by parent company JG Summit Holdings Inc." (quoted from the Business Mirror). It was the first IPO for this year and will be followed by Nickel Mining Corporation and IP Converge Data Center Inc..  But what is IPO and why do company hold it?
       From Wikipedia,  "An initial public offering (IPO), referred to simply as an "offering" or "flotation", is when a company (called the issuer) issues common stock or shares to the public for the first time. They are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded. An IPO can be a risky investment. For the individual investor it is tough to predict what the stock or shares will do on its initial day of trading and in the near future since there is often little historical data with which to analyze the company. Also, most IPOs are of companies going through a transitory growth period, and they are therefore subject to additional uncertainty regarding their future value."
       As for me being a newbie in the stock market, I did not participate in the IPO of Cebu Pacific last Tuesday because of the  fact that I'm not yet familiar on how will be the reaction of the market after an IPO. I still want to learn how does the price moves after some time. One of my friends who managed to take some CEBU PACIFIC (stock code: CEB) shares immediately sold a little part of his shares one day after the IPO with a gain already! The IPO price for CEB was P125/share and it opened at P132/share before closing at P133/share on its first trading day. Good thing my friend already unloaded some of his shares a day after the first trading day because on the third day CEB closing price was P125.10 already,  1 fluctuation only above its IPO price! See, if I participated in that IPO I could have probably still holding my CEB shares right now at P125.10.
"He who has a bountiful eye will be blessed..." < romer is aikonic, aikonic is romer >

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