What is an IPO? What Investors Must Know & Where to Find Upcoming Listings

In today’s modern business world, raising capital through an Initial Public Offering (IPO) has become a vital tool that many companies use to drive stable and sustainable growth. This article will guide readers through the meaning of an IPO—from the company’s preparation process to the key considerations investors should weigh before making investment decisions. It also offers strategies to help ensure effective IPO investing, along with tips on how to stay informed with accurate and comprehensive IPO news.

What Is an IPO? Definition and Importance

An IPO, or Initial Public Offering, is the process by which a private company offers its shares to the general public for the first time. The primary objective is to raise capital for business expansion and transition from a private entity to a publicly listed company on the stock exchange.

Launching an IPO is a significant milestone for a company aiming for sustainable long-term growth. It also allows the public to participate in the business's success.

Why an IPO Matters?

An IPO is not only a gateway to accessing capital but also plays a pivotal role in propelling the organization forward in several key areas:

• Capital for Business Expansion: An IPO enables the company to fund new projects, develop technologies, enhance operational efficiency, or broaden its customer base without relying on loans.
• Increased Share Liquidity: Listing on the stock exchange facilitates the buying and selling of shares, attracting both retail and institutional investors.
• Enhanced Credibility: Public companies are subject to strict disclosure and governance requirements, fostering transparency and building trust among investors and business partners.
• Public Ownership Opportunity: General investors can own shares in a potentially high-growth company, giving them a role in shaping its future direction.

Why Companies Choose to Go Public?

The decision to go public typically stems from strategic goals aimed at driving growth and enhancing long-term competitiveness. Key reasons include:

• Raising Capital Without Debt: Selling shares provides access to funding without the burden of interest-bearing loans.
• Improving Competitive Capabilities: With increased capital, companies can expand operations or launch new initiatives more efficiently.
• Boosting Corporate Image: Being listed on the stock exchange enhances a company’s reputation among customers, investors, and partners.
• Allowing Shareholders to Monetize Holdings: Existing shareholders can sell part of their shares to generate cash or reduce investment risk.

Preparation Steps Before Launching an IPO

Taking a company public through an Initial Public Offering (IPO) is a major milestone that opens doors to broader business opportunities. These include capital fundraising, enhanced credibility, and building an international image. However, the success of an IPO depends heavily on meticulous preparation across structural, managerial, financial, and regulatory dimensions.

1. Assessing the Company’s Readiness

Before starting the IPO process, a company must evaluate its readiness across several key areas. These include financial stability—demonstrated by consistent profitability and positive shareholders’ equity—a clear growth strategy aligned with its vision and long-term goals, and a transparent management structure supported by robust internal controls.

2. IPO Readiness Preparation

The preparation process begins with organizational restructuring, separating core business operations from unrelated activities. The company must appoint a board of directors and independent directors in compliance with regulatory requirements. Financial statements must be updated to meet the Thai Financial Reporting Standards (TFRS), and a well-defined capital utilization plan must be developed.

Additionally, the company must engage financial advisors and experts, such as auditors and underwriters, to support document preparation, valuation, and public offering processes. A comprehensive due diligence process must also be conducted, covering legal, financial, and risk management aspects.

3. Entering the Stock Market

Once preparations are complete, the company submits a filing to the Securities and Exchange Commission (SEC), including a prospectus and internal control report. If approval is granted within the required timeframe, the company proceeds to determine the IPO price, often through a bookbuilding process to reflect investor demand.

The public offering is then promoted through investor outreach and roadshows, followed by a subscription period that must occur within six months. The company also files for official listing on the Stock Exchange of Thailand (SET) or Market for Alternative Investment (mai), depending on its size—large companies typically list on SET, while medium and small enterprises may opt for mai.

4. Relevant Requirements and Fees

The company must meet the minimum number of minority shareholders as stipulated by regulations and pay associated fees, such as application fees for securities offerings and initial listing fees. These fees vary based on the company’s capital size and the chosen market.

Comprehensive preparation and systematic execution are crucial for successfully navigating the IPO process, paving the way for sustainable growth in the capital markets.

Understanding IPOs Before You Invest

Investing in IPOs (Initial Public Offerings), where companies offer shares to the public for the first time, often draws attention from investors seeking opportunities in high-growth potential companies. However, this appeal comes with uncertainty and risk. Therefore, investors should carefully consider various key factors before making a decision.

1. Understand the Business and Company Fundamentals: Before purchasing IPO shares, investors should thoroughly study the company’s business model. What industry does the company operate in? What are the industry trends? How strong is the company’s competitive position? It's also important to assess the company's long-term vision and operational strategy.
2. Analyze Financial Performance: Reviewing financial statements over the past 3 to 5 years helps gauge profitability, liquidity, and financial health. Common indicators such as the P/E ratio (Price-to-Earnings), P/BV ratio (Price-to-Book Value), and EV/EBITDA (Enterprise Value to Earnings Before Interest, Taxes, Depreciation, and Amortization) are widely used to assess a company’s intrinsic value.
3. The Purpose of Fundraising Matters: It’s essential to understand why the company is going public—whether it's to fund expansion, repay debt, or enhance liquidity. A clear objective aligned with the company’s business plan can help build investor confidence.
4. Management Team and Vision: An experienced and capable leadership team is key to long-term success. Investors should examine the backgrounds of company executives, their growth vision, and their ability to lead the company in a competitive market.
5. Evaluate Risks and Opportunities Thoroughly: IPO investments often involve high volatility, especially during the initial trading days. Investors should be prepared for uncertainty, considering risks related to competition and operational performance, as well as opportunities for returns through price appreciation or benefits such as warrants.
6. Carefully Assess Share Valuation: In addition to analyzing financial statements and ratios, investors should consider using the Discounted Cash Flow (DCF) method to estimate the present value of future cash flows. Comparing the company with industry peers can help determine whether the IPO price is reasonable.
7. Important Precautions Not to Overlook: Avoid investing solely based on brand recognition. Review the full prospectus (filing), and verify the credibility of the underwriter responsible for the share offering.

While IPOs may offer the potential for high returns, they are not suitable for everyone. Investors should conduct thorough analysis, understand the risks, and treat IPO investments as part of a well-diversified portfolio to increase the likelihood of achieving stable long-term returns.

Strategizing Investment in IPO Stocks

Investing in IPO (Initial Public Offering) stocks involves acquiring shares of a company that has just been listed on the stock exchange for the first time. While this type of investment can offer promising short-term profit opportunities, it also carries inherent risks that investors must evaluate carefully.

1. Understanding IPOs and Their Advantages: An IPO is the process through which a private company becomes a publicly listed entity in order to raise capital from general investors. The advantages of investing in IPOs include the opportunity to purchase shares at a price potentially lower than their market value, access to high-growth potential companies, and the possibility of short-term gains driven by strong initial demand on the first day of trading.
2. Conducting Analysis Before Investing: Investors should study the company’s prospectus to gain insights into its business model, vision, and fundraising objectives. It is essential to assess the company’s competitive edge, growth potential, and historical financial statements to evaluate profitability. Additionally, comparing the price-to-earnings (P/E) ratio with peers in the same industry and understanding the associated business risks are critical steps before making an investment decision.
3. Planning a Systematic Entry: Investing in IPOs starts with opening an account with a brokerage firm and verifying the credibility of the underwriters. Investors should thoroughly research the target stock and allocate a budget that aligns with their risk tolerance. It is strongly advised not to use borrowed funds for IPO investments.
4. Setting Goals and Managing Risk: Clearly define your investment objectives, whether for short-term speculation or long-term holding. Set predetermined exit points and avoid placing all capital in a single stock. Diversifying across various sectors is recommended to reduce overall investment risk.
5. Monitoring Closely Post-Investment: Once invested, investors should regularly monitor the company’s performance and news updates. Setting stop-loss points can help limit losses, while selling gradually as the stock reaches target prices can help lock in gains. Moreover, learning from past experiences and refining stock analysis skills can enhance confidence in future investments.

Investing in IPOs offers a chance to be part of high-potential businesses from the start. However, it requires thorough planning, informed decision-making, and disciplined risk management to generate sustainable long-term returns.

Sources of Information on Upcoming IPOs

Keeping up with the latest IPO (Initial Public Offering) news is essential for investors interested in newly listed stocks. There are several reliable sources of information, including the following:

• Stock Exchange of Thailand (SET) Website: This is the primary source that compiles the latest listings and detailed information on companies newly registered on the stock exchange. Investors can access comprehensive and official IPO data here.
• The Securities and Exchange Commission (SEC) Thailand Website: Provides information on the filing of registration statements and draft prospectuses submitted by companies planning to offer IPO shares.
• Securities Company Websites: Many securities firms publish analyses and insights on upcoming IPO stocks, offering perspectives that may be helpful in making investment decisions.
• Settrade Application: A convenient mobile source for IPO updates, offering features such as "IPO Performance" that present detailed data on IPO stocks from the past two years, including trading statistics, financial information, and return rates.
• Financial and Investment News Websites: Platforms like InfoQuest regularly update IPO-related news, helping investors stay informed about the latest developments among companies preparing to go public.
• Websites of the Companies Going Public: These often include dedicated investor pages (IR Website) that provide information about the IPO offering and detailed company profiles.

Accessing a variety of credible sources allows investors to gain a well-rounded perspective before making investment decisions. However, it is crucial to verify the accuracy of the information and proceed with careful consideration, as IPO investments generally carry higher risks than established stocks in the market.


About Optiwise

Optiwise offers Investor Relations & ESG consulting services, corporate website design, and IR website development. We also provide advisory services for initial public offerings (IPOs) and assists in preparing disclosure documents for public companies. Additionally, our public relations efforts aim to build credibility and enhance the corporate image.

For more information about Optiwise's services, please contact us here.