General information:
An IPO (Initial Public Offering) is the process by which a private company sells shares to the public for the first time and thus goes public. This serves to raise capital in order to finance further growth.
Reasons for an IPO:
Raising capital: enables the financing of expansion plans, research and development or debt reduction.
Increased awareness: An IPO can increase public awareness and the market value of a company.
Pricing:
The price of a share in an IPO is heavily influenced by the valuation of the company beforehand.
The pricing itself is determined by the bookbuilding process. It aims to determine the optimum offer price for a company's shares based on investor demand.
To this end, subscription orders are collected from investors. They indicate how many shares they would like to buy and at what price within the specified price range. The demand is analyzed to determine the optimal price. This price will typically be at the upper end of the price range if demand is high, and at the lower end or even below if demand is lower.
First trading day
This is followed by the first day of trading: the shares are traded on the stock exchange for the first time. The opening price may differ from the offer price, depending on the market reaction.
IPOs with Trade Republic
Please note that it is currently not possible to participate in an IPO via Trade Republic. However, we will be happy to check with our trading partner whether the new ISIN can be listed and traded after the IPO.