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You are here :   Home > INVESTING IN THE STOCK MARKET > Subscribing for shares in an initial public offering (IPO)

Last modified date : 15/08/2013
 INVESTING IN THE STOCK MARKET

Subscribing for shares in an initial public offering (IPO)


What do we mean  by an IPO?
An initial public offering means the listing of a portion of a firm’s shares on the stock market. The firm is known as the issuer.
The issuer may float on the Stock Exchange either by raising capital, by issuing new shares or by selling a portion of its share capital by offering already existing shares.

Who can take part in an IPO?

Any individual or corporate entity wishing to invest may subscribe for shares in an initial public offering, thereby becoming a shareholder in the company.

What are the rights we get by subscribing for shares in an IPO?
By becoming a shareholder, the subscriber will get several benefits :

 

pictos01.gif The shareholder will receive a share of the company's profits known as a dividend based on the number of shares that he owns;

 

pictos01.gif  The shareholder will benefit from any capital gains arising from a rise in the company’s share price;

 

pictos01.gif  The shareholder will be investing in a liquid investment since s/he can sell his/her shares in the market at any time.

When should one subscribe for shares in an IPO?
Subscription for shares in an IPO is made during the subscription period, which is specified in the prospectus issued by the company before going public.
The subscription period generally lasts  3 to 10 business days. It may be closed early depending on the issuer’s request and money raised.

What should be known before subscribing for shares in an IPO?
Before subscribing for shares in an IPO, it is important that the subscriber reads the prospectus. This will enable potential shareholders to form their own opinion about the company and make their own decision about the investment opportunity.
The prospectus is available to the public:

 

pictos01.gif At the the Casablanca Stock Exchange’s registered office ;

 

pictos01.gif On the Casablanca Stock Exchange’s website www.casablanca-bourse.com ;

 

pictos01.gif At the registered office of the firm making a public share offering ;

 

pictos01.gif At branches of banks and brokerage firms participating in the offering as a member of the placing syndicate.

How to subscriber for shares in an IPO?
The first step consists in opening an account with a financial intermediary that can be a bank or brokerage firm.
The second step, which is the subscription, consists of placing a buy order with a member of the placing syndicate, which are brokerage firms and banks that are responsible for selling the securities.
The subscriptions are subsequently centralized at the Casablanca Stock exchange which oversees, on the date set in the IPO timetable, the allocation of securities and the generation of trades.
Delivery of securities and cash payment take place three business days following initial trading in the securities.

 

   


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