| |APRIL,2009 | | |MBA FINANCE CLASS | | | | | |SCHOOL OF BUSINESS UCC | | | | | |By | | | | | |Edward Nii Amar Amarteifio |
|ANALYSIS OF ipo PROSPECTUS OF utfsl AND ecobank ltd | |This paper takes a critical look at the IPO prospectus issued both by UTFSL and ETI in 2008. Despite the fact that these prospectus are the base | |used by any prospectus investor to purchase newly issued shares, the required attention and care is(as we found) not usually given to it. | INTRODUCTION
Investing in the stock market should not be a "heart and gut" affair based on hunches, guesswork, hot tips, rumours or speculation. This is true for investments in securities of companies already listed on the stock exchange; it is also true for investments in securities of companies seeking listing for the first time. Seeking listing on a stock exchange is also called 'going public' or 'flotation'. The purpose of seeking listing is generally to raise funds for the company's business expansion or growth. The company seeking listing will therefore offer part of its securities to be subscribed by the public, as part of the listing exercise. This offer is called an Initial Public Offering (IPO). Currently, any company wishing to undertake an IPO would have to get the approval from the Securities and Exchange Commission before the IPO can be carried out. The Securities and Exchange Commission, in considering an IPO proposal, would take into account the overall suitability of the company undertaking the IPO. Once approved, the company is required to issue a prospectus that tells about the company, what it does, how it has fared and how it expects to perform in the future. The purchase of securities offered by the IPO Company constitutes, in effect, a contract between the company the investor. As with any contract, it is important that one fully understand his rights and the terms and conditions as set out in the prospectus. A prospectus must contain all relevant information about the company making the IPO, and must be filed with the relevant authorities. Therefore the information that is disclosed in the prospectus relates to the terms on which the invitation or offer is made. It is important for an investor to read and understand these terms in the prospectus in order to be able to assess for himself/ herself the risks or merits in investing in a specific the company.
ECOBANK TRANSNATIONAL INCORPORATED (ETI)
Reasons for the Offer
The Company’s code 1963 (Act 179) makes it mandatory for any company which decides to offer shares for subscription to outline what it intends to use the funds to be raised for. ETI’s deport on the use of proceeds from the offer was fairly good. Emphasis was laid on good past records which served as a panacea for future achievement. Most prospective investors would be very much interested in knowing what exactly the funds being ranged would be used for as well as its past financial and perhaps only read this portion of the prospectus. It is however a step in the right direction that the band gave some highlights of its achievements. The four major purposes for the offer highlighted were...
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