IPOs are still one of the most popular options to raise funds
History has already witnessed multiple companies which decided to seek a listing on the market, therefore they carried out an IPO. On the outcome of these IPOs, many of these firms’ founders became billionaires.
PaySpace Magazine offers you the list of the most prominent IPOs of 2018. In addition to this, we have also prepared a little foreword, where we try to figure out what an IPO actually is, and why companies still consider them one of the best options to raise funds and take their place in market listings.
What is an IPO?
An IPO is when a company wants to offer its shares to institutional/individual investors, therefore it carries out an IPO (initial public offering, also known as stock market launch). This, in its turn, leads to a change in the type of a company’s ownership, and a firm, being a privately held company, transforms into a public company. Private companies can also have shareholders, but it is usually a limited number of people. Besides, private companies are faced with more severe demands and requirements of the regulatory bodies than public companies. Preparations for an IPO launch typically take from a couple of months to one year (sometimes even more), and, to put it mildly, does not come cheap.
Why do companies need one?
It is all usually about the money, so a company wants to raise funds. Once a company attracts new investments, it can use the money for business developing, or, for instance, reinvestment in its infrastructure.
If a company launches an IPO, new possibilities arise. For example, when your stocks are publicly traded, you can offer your top managers higher salaries, while poaching new professionals becomes easier. Handling an exit strategy is one more good example of an IPO use. We all remember that Facebook acquired WhatsApp, and Facebook had already gone public by then. Therefore, most of the sum ($19B) was paid in Facebook shares. Moreover, being in NYSE or NASDAQ, the world’s major stock exchanges lists, is at least prestigious.
Now let’s take a look at the most notable IPOs of 2018.
Spotify is a famous and one of the world’s first music streaming platforms, developed by Swedish company Spotify Technology S.A.
Spotify shares started from $165.90, which was roughly 26% more than NYSE valued them ($132). The price at the close of the session was $149.01, which valued the world’s largest streaming music service at $26.5B.
Xiaomi is a Chinese electronics company founded in 2010. This company mostly specializes in smartphones, laptops, consumer electronics, and mobile app manufacturing and development. In 2018, this firm was the world’s fourth-largest smartphone manufacturer.
The company debuted in Hong Kong, and the shares started from HK$17. However, the shares were traded HK$16.58 and closed at HK$16.80. The company expected to raise $100B, but they raised only $54.3B. Nevertheless, this was a good result, and just the first step, as the firm’s representatives say. The company looks forward to the future with confidence, and one of their next steps is to become the world’s third-largest smartphone manufacturer.
Dropbox is a file hosting service by Dropbox, Inc. This popular service offers users cloud storage, file synchronization, and client software.
The company expected to go public with an initial price of about $21 per share, however, the stock opened at $29 a share and closed at $28.48 per share. Thus, Dropbox’s market cap totaled approximately $12.54B.
Adyen was founded in 2006 in the Netherlands. Adyen began as a payment processing company for online stores and has acquired customers such as Netflix, Facebook, and Spotify.
The company is tapping into the so-called trend of “omnichannel” shopping, trying to help merchants process payments online, across mobile, and in-store.
Adyen decided to launch at €240 per share. It was undoubtedly a bold and tough decision, but it gave the company a market cap of €7.1B ($8.3B). Adyen’s valuation that it disclosed was $2.3B in 2015, and comparing to the previous valuation, the company had gained +195%, which is quite impressive.
5. Sensirion +85%
This Swiss company specializes in the manufacture of digital microsensors and systems. Despite the fact that Sensirion’s IPO launch (taking into account all IPO-related costs and share program for employees) wasn’t very successful, they were able to raise 8.8M Swiss francs ($8.9M), which totaled in a valuation growth of +85%. The company lost around 2 million Swiss francs of net worth, but they ended the year in a good position:
- Revenue CHF 90.2 million (90.9M);
- 30% growth compared to previous year’s period, of which 18% organic, 11% inorganic, 1% foreign currency effects;
- Double-digit organic growth in all end markets.
DocuSign is an American company that specializes in electronic signature technology and digital transaction management services software development.
DocuSign’s initial stock price on Nasdaq was $38 per share, but they started from $29 per share and closed at $39.73 a share. Thus, the company raised $629.3M from its IPO, which resulted in a valuation of $4.41B.