BFB1001 Lecture Notes - Lecture 9: Stock Valuation, Underwriting, Systematic Risk
2 Aug 2018
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Document Summary
When a private company wishes to raise equity capital through stocks, it undertakes an initial. As most companies are not familiar with how to access the stock market and regulations involved, an underwriter will often be engaged to manage the ipo. Underwriters are nancial institutions who are experts at raising capital and most of them are investment banks. Upon ipo, the company is considered public; because members of the public are welcome to partake in ownership through it"s listing on the stock exchange. Should equity capital be needed after ipo, more shares can be issued and sold to the public in a. Share placement or just to existing shareholders in a rights issue. Shares are considered a form of direct nance. When an investor purchases shares, they join the ownership of the company in return for the capital provided: e. g. if an investor owns 1 out of 100 shares, the investor owns 1% of the company.
