pre-IPO

Pre-IPO

An offering of shares in a company before its initial public offering (IPO). Pre-IPO offerings are available only to a limited number of individuals, and are done in advance of an expected IPO. Pre-IPO prices are generally much lower than they would be at the IPO, but are risky for the investor, as their value is contingent upon the company eventually making an IPO. This is because pre-IPO shares attract little demand in situations in which there is insufficient demand for an IPO soon after; they usually become illiquid securities.

pre-IPO

An offering of a company's shares prior to the firm's initial public offering. Investing in a pre-IPO tends to be very risky, in part because the planned IPO may never take place. In addition, shares from a pre-IPO are unregistered and are likely to be very difficult to sell until the public offering is completed.
Case Study Acting Securities and Exchange Commission chairman Laura Unger told a congressional subcommittee in July 2001 that 16 of 57 analysts reviewed by SEC staffers had invested in 39 pre-IPOs of companies they subsequently covered. In most cases shares offered in pre-IPOs are priced substantially lower than the subscription price in the subsequent IPO, meaning that many analysts who participated were able to acquire shares at very low prices. The conflict of interest is clear: analysts are likely to have a personal interest in promoting stocks they own, thus tainting the independence of their recommendations. Corporations are anxious to have analysts come on board as shareholders, in part because of the creditability analyst ownership conveys to the investing public. Analyst ownership may also result in positive investment recommendations that become a marketing campaign for the firm's stock.
References in periodicals archive ?
Based on psychological ownership theory, we propose that formal ownership of entrepreneur, Pre-IPO age promote psychological ownership and then lead to capital expropriation.
Finally, while analysts' forecasts are upwardly biased for all firms, the magnitude of this bias is greatest for firms with rapid pre-IPO revenue growth.
The Company has a diverse set of pre-IPO investors, many of whom have been invested for over seven years.
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8% stake in Chinese Internet content and marketing services group Bitauto Holdings Ltd (NYSE:BITA) from some of its pre-IPO stockholders, the target said today.
com)-- "Our mission is to provide the most exclusive and unique pre-IPO and alternative investment opportunities in order to go above and beyond our member's expectations and needs for unique and rare investments that bring extraordinary returns," says Co-Founder Reggie Sanchez.
International Resource News-August 24, 2011--Shandong Dadi Salt Chemical Group Company Limited completes pre-IPO financing(C)1994-2011 ENPublishing - http://www.
The opportunity to build a board de novo is a competitive advantage for a pre-IPO company because it adds essential skill sets to a budding company.
KARACHI, March 01, 2010 (Balochistan Times): NIT has received tremendous response for initial offering of its Income Fund with combined pre-IPO & IPO subscription by individuals, corporations and financial institutions, surpassing Rs.
KARACHI, March 01, 2010 (Frontier Star): NIT has received tremendous response for initial offering of its Income Fund with combined pre-IPO & IPO subscription by individuals, corporations and financial institutions, surpassing Rs.
The Global Jordan Fund launched in October 2006 is aimed at achieving capital appreciation with optimum returns over the medium- to long-term by investing in the ASE as well as in initial public offering (IPO) and pre-IPO issues in Jordan.