Company floats not so buoyant
Initial Public Offerings (IPOs) post the April 2000 tech wreck have seen more companies going backwards than forwards, according to the Australian Financial Review (30/6/01). Further analysis reveals that investors had a one in ten chance of more than doubling their money but 60 per cent chance of losing.
Once upon a time access to IPOs were reserved for the more loyal clients of broking houses. These days most online brokers will allow their clients access to IPOs for which they’ve received an allocation, together with such investment websites as FloatNews and Investorweb.
While the general public has easier access to IPOs their recent underperformance shows that many have lost money over the ensuing year. Investors need to take a good hard look at a company’s prospectus and if they don’t understand all the elements, speak to someone who does.
Alternatively, find out whether there is research available on the company about to list. Floatnews.com.au, Investorweb.com.au and the AFR.com.au all have detailed information on upcoming floats and past float analysis.