One of the areas of financial services AMTD recently entered is capital markets. AMTD is well-known across the world as a premier securities services provider with expertise in local asset management and corporate insurance brokerage. Although, its capital markets division was only launched in 2015, Calvin Choi of AMTD is encouraged by its successes so far. AMTD has been involved in several major financial transactions, including IPOs. For the purposes of this blog post, Calvin Choi of AMTD will discuss what an IPO is.
The Basics of IPO
When a company has become large enough and successful enough to arouse public investment, it will announce an initial public offering (IPO). You see, prior to a company becoming public, its funding would have come from owner investment, funds from friends, family, and associates, or money from professional investors, like venture capitalists. When a company is private, the general public is not able to invest in it without an inside track.
When a company goes private, this means that it’s selling some shares of its company to be traded on the stock market. Although, it loses some advantages to being private (like not being bound by the SEC’s strict financial reporting and accounting requirements), a company that goes private is able to raise a ton of money that it can use to grow or invest in new products or research.
Other benefits of going public include having lower capital costs, providing employees with options to attract better talent, facilitating acquisitions, and increasing the company’s overall pubic profile. Also, an IPO takes away much of the risk from the company’s founders and early investors as many of the shares sold to the public will be theirs. Calvin Choi of AMTD is excited by the capital market division’s early success working on IPO transactions, and it will likely conduct many more transactions in the very near future.
This blog will take a look at other issues regarding IPOs, trading stocks, and other information regarding securities in Hong Kong and across the globe.