Essentially, to the investor with a few bucks left lying around, the IPO has a big sign on it that reads: “Free money!”
It’s simple really. A company that has spent years growing and now has a solid business with good management, a thumping order book and well-managed cash flows has big plans for expansion. But in order to execute those plans it needs some money – your money – and promises to cut you in on a piece of the action if you hand it over.
When you feel you want your money back or the company has gone all the way to best value, just click your mouse a few times and, hey presto, banked profit. That’s the theory anyway.
To read the rest of this article, download the latest edition of FE Trustnet Investazine here.
