When a private company first sells shares of stock to the public, this process is known as an initial public offering (IPO). In essence, an IPO means that a company’s ownership is transitioning from private ownership to public ownership.
This process is to be taken by private owned companies, to go for the public inviting all eligible investors to come and take shares in the company. By doing this, the company becomes “Public Company”, open for the public to give hand and join forces.
The companies & Securities Markets laws, provide for necessary details & procedures for initiating and starting the IPOs and thus transferring the private company to be a public company registered in the securities markets as required by the law
There are different types of IPOs, namely, the fixed price offering and the book building offering, each type has got its own characteristics & features.
Normally, companies go-public after careful consideration and deep understanding of the path of the company and, also, the suitability of the market and the public to take the venture. Private companies, will not go for this dramatic change unless they are confident about themselves and the goods or services they are or will be offering in the market for the interest of the new comers.
There are many advantages to-go-public, as inviting new institutional investors \ shareholders in the company wherein they bring their own money which increases the capital of the company. Moreover, to bring new minds & business ideas to share in developing the future march of the company. As per the company law, any company can change its types \ structure to another type approved by the law.
During last weeks, it was in the news that, Lulu Hypermarket company puts an IPO offering good portion of its shares to the public in Abu Dhabi Securities market. What is good, is that, the public rushed to take over the offered shares within very short time. This step clearly indicates that Lulu Hypermarket Company is an excellent, profitable & future company for lucrative investment.
The rush of the public, is a good sign and clear certificate of the very good health of the company & the public therein are interested to join this profitable excellent investment. This certificate, no doubt, shows the remarkable stand of the company and good conduct not only in Abu Dhabi, but all over the world where the branches of the company are excelling in their services to clients and consumers. Always, good service yields.
By this courageous step, this company is entering the public show and by this venture, all its activities will be mirrored in the Securities Markets, where transparency, accountability and full disclosure of all details to the public is a legal requirement. We say this, as listing in the markets will definitely streamline the corporate business of all companies and this will help in boosting the national economies. Going-to-public, is a good step for all private companies, as well as, the public in general.
In Bahrain, there are good examples of going-public & we look for more competent private companies to follow suit.