Enter the IPO world: where the dream of owning shares begins

Have you ever wondered why some companies need to sell shares to the public, and what you can gain from subscribing to their shares? In fact, early-stage investments during this experimental design phase might offer the highest potential profits, but they also require understanding and caution.

Many investors miss out on remarkable returns simply because they do not understand the process or the system’s requirements. This article will help you understand IPO (Initial Public Offering) what it is, how to subscribe to shares, and how to choose stocks that align with your investment goals.

IPO (Initial Public Offering) What Is It?

In reality, an IPO is just one method companies use to raise funds from the public for the first time. Companies need money to expand their business, develop new products, or pay off debts. The most efficient way to do this is by offering shares to the general public.

The positive side of this experimental design is that the company receives fresh capital. The downside is that the company must disclose all financial information to the public, including data that might benefit competitors.

Why Should You Care About IPO Stocks?

For investors, the benefits of early share subscription are quite significant:

Lower Price Than in the Market - IPO prices are often set below the expected market price. Some stocks can increase in value by up to 200% in the initial phase.

Regulatory Support - Investing in IPO stocks is safer because it is strictly regulated by the Securities and Exchange Commission and the Stock Exchange.

Actual Ownership - You are not just investing money; you become part-owner of the company and are entitled to benefits when the company makes profits.

But Beware of the Drawbacks

Not everything is always rosy. IPO stocks also carry risks:

High Price Volatility - In the initial period after listing, stock prices can surge or fall rapidly.

Limited Information - Investors have limited time to study the company, which may lead to insufficient decision-making.

Risks of New Companies - The company might fail to manage the new capital properly or face management issues.

What Qualifications Must an IPO Company Have?

Companies seeking to go public must be limited public companies with a solid financial standing. The major shareholders must hold at least 300 million baht.

Additionally, the company must demonstrate good profit management. Usually, the company should have a net profit of more than 50 million baht over the past 2-3 years or have a market capitalization exceeding 7,500 million baht.

The company must undergo rigorous checks on internal financial systems, governance, and absence of conflicts of interest.

IPO Subscription Process

Investors have two ways to enter the IPO world:

Method 1: Purchase Before Listing on the Stock Exchange (Primary Market)

This is the period when the company offers shares for the first time. Prices are usually low, and you have the best chance to get favorable prices. The subscription period is limited, typically no more than 1-2 weeks. You can subscribe through brokers or the stock exchange website.

Method 2: Purchase After Listing (Secondary Market)

After the company is listed on the stock exchange, you can buy shares through regular stock market channels, just like buying any other stock. The advantage is that you have more time to study, but the price may be much higher than during the IPO.

Where to Find IPO Information?

The Thailand Stock Exchange (SET) website is the most reliable source. You will see a list of companies preparing for new IPO launches, along with details about prices, subscription periods, and fundraising purposes.

Additionally, you can download decision-making documents (Prospectus), which contain detailed information about the company, financial status, and future business plans.

Example of Investing in an IPO

Imagine a hypothetical company started by a single founder holding 100% of the shares with an investment of 3.6 million baht. When the company decides to go public by offering an additional 800,000 shares at 15 baht per share, it will raise 12 million baht.

Subsequently, the founder will hold approximately 69% of the shares, while new investors will hold 31%. The founder’s share value will increase to 27 million baht, even without additional investment.

Impact on the Economy

When a company receives additional funds, it can expand its business, create jobs, and develop new products/services, which benefits the overall economy.

For example, a tourism company that raises capital from an IPO might open new branches, generating profits for itself, creating jobs, and increasing income for the community.

Summary and Recommendations

Investing in IPOs is not difficult. You don’t need to be a financial genius, but you must have basic understanding, study company information, and make careful decisions.

The more you learn, the higher your chances of success. Don’t miss the opportunity to follow new IPO information on the SET website and start your investment journey in this exciting stock world today.