Initial Public Offering (IPO)
الطرح العام الأولي
An initial public offering is the first sale of a company’s shares to the public, after which the shares are listed and traded on an exchange. Companies use IPOs to raise capital or to allow existing owners to sell part of their stakes. On the Egyptian Exchange, offerings are usually split into a public retail tranche and a private-placement tranche for institutions.
Example
A family-owned company sells 30 per cent of its shares to the public at a set offer price. The founders convert part of their ownership into cash, or the company raises new money, and from listing day the price is set by the market.
Why it matters
An IPO is the moment a private company becomes publicly priced and subject to disclosure obligations. It is also one of the few occasions when money paid by investors actually reaches the company rather than a previous shareholder.
A common mistake
Assuming the offer price is a fair value. It is a price negotiated between the seller and its advisers, and the seller has more information about the business than any buyer does.