As i navigated a corporate and securities regulation course at Sydney University Law school, it became more and more clear to me that despite the fact that i knew the ASX (stock market) listing rules, insider trading principles and a bunch of continuous disclosure regimes found in the corporations act (to be discussed later), I was not anywhere near clear on a number of important questions that kept arising concerning the reality of a company actually raising investment:
- What is the difference between raising investment / capital (used interchangeably) through an IPO (Initial Public Offering) on the stock exchange versus through private equity and do the two ever mix?
- What are the variations of Private equity investment on offer and how do they relate to ‘going public’ through an IPO ?
- What are the different ways private equity firms make their money ?
- When would a company wish to raise capital publicly in an IPO versus privately from a private equity investment group ?
- What factors affect this decision and what are the differing constraints placed on the company in an IPO as opposed to those imposed by a private equity investment group ?
I plan to answer each of these questions over a series of blogs about fundraising, investment and the factors affecting both investors and companies in these scenarios. I cannot outline how complex this area of knowledge can become due to one’s tendency to want to learn everything at once; leaving most frustrated and confused. Hopefully, i will be able to keep everyone’s attention by breaking down what can become complex into simple and useful pieces of information. Please remember i am not writing this for experts. Continue reading Fundraising and Investment through IPOs and private equity (part one)