Why are IPOs allocated to funds?
According to the report of Tejarat News, the review of the process Initial supplies In the foreign exchange, the response to criticisms in this area, a look at the experience of the IPO Calendar, why small initial offerings are allocated to funds and the valuation criteria of knowledge-based companies to participate in the capital market were the focus of Tejaratnews’ conversation with the CEO of Farbour. The first part of this conversation titled Some IPO Pricing Is Not Fair was published yesterday.
CEO OTC In another part of this conversation, the issue of assigning some Initial supplies He pointed to the funds and said: This decision was implemented for logical reasons and after expert reviews, because before this, initial offerings with very small numbers, for example 30 to 50 thousand Tomans, were placed in the portfolio of retail shareholders and were sometimes forgotten.
He continued: Currently some cases Initial supply After the authorization of the organization, the price is discovered by the investment funds. A shareholder can buy shares at a price discovered by professional investors.
Advantages of allocating initial supply items to funds
Regarding the advantages of this matter, Fedai said: With this, we will not have micro and small supplies in the market with 200% growth. On the other hand, when fund managers, as market experts, can discover the real price of a share, there will no longer be any doubt about unrealistic pricing in initial offerings.
He also related to the instructions Initial supplies He also pointed out and added: According to this instruction, the initial supply of less than 500 billion Tomans can be allocated to the funds. The reason for this decision was the very small numbers in allocating primary supplies to ordinary people. For example, in a case of a small over-the-counter initial offering, if the shares were to be assigned to all real and legal codes, each person’s share of the initial offering would be 10 thousand tomans. A symbol that has a share of 10,000 tomans in the retail investor’s portfolio will definitely be abandoned, and this issue had many negative consequences for the market.
He explained to the public about the negative consequences and damages of small initial supplies: the abandonment of these cases Initial supply Very little in the portfolio of small shareholders, sometimes it made even the small investor forget to sell that small share. As a result, space was provided for projects of shares by groups or individuals. In the following, we saw illogical and several hundred percent growth in these symbols.
Fadaei emphasized: In simpler terms, the problem was that in very small supplies, the figure becomes so small that people forget the share even for sale, and this lack of supply and small share will have negative consequences.
Trying not to hit the stock market with initial offerings
This official in the stock exchange, emphasizing that for all capital market officials, not to be affected by the current market trend Initial supplies And controlling market risks is the main priority, he said: Based on this, it was decided to allocate small supplies to the funds. This event has another advantage that it takes resources out of investment funds. In fact, it does not make the small shareholder to buy a small share to engage the market in supply pressure. For example, for an initial supply of 100 billion, the market faces a selling pressure of 400 billion tomans from a few days ago. In the end, each code will receive, for example, 50,000 Tomans of shares. Such a trend makes the market negative for two to three days.
The CEO of the exchange continued by pointing out that some of Initial supplies It is also institutional and the publisher cannot offer the share below a certain price, he said: In the initial offering to the public, in order to protect the interests of the small shareholders, all aspects should be considered and various guarantees should be received from the publisher. For example, the price floor should be guaranteed, the option should be defined for the share, and similar cases, but sometimes some institutional investors are not able to provide such guarantees.
Don’t judge startups by one standard
In another part of this conversation, the CEO of Fara Exchange, referring to Tapsi’s entry into Fara Exchange as an initial capital market startup, said: The performance review of this startup shows that it has a growing trend. The improvement of Tapsi’s financial statements for the first 4 months of this year compared to last year has been acceptable.
In reviewing the position of other startups in the capital markets of the world, Fedayi said: Check when a company like Amazon became profitable, when it was offered in the capital market and what was its price.
Emphasizing that in order to check the performance of domestic startup companies, it should be compared with a startup similar to his own, he said: the life of startups is generally short. In addition to the fact that during the last 2 years, which was the era of Corona, some of these companies had very good growth. Some also experienced serious injuries during the restrictions of the pandemic.
Profitability of startups takes time
The CEO of Farbours emphasized the development phase of startup companies and added: This is why the marketing and manpower costs of these companies may be high. But these companies will be profitable after reaching the desired point. In many cases, due to the nature of knowledge-based companies, they have high costs for equipping and developing infrastructure.
According to him, it is because of these things that startup companies cannot be judged by examining their financial statements and judging whether they are good or bad. The pandemic crisis of the last two years created difficult conditions for many of these companies, especially tourism startups. All these things should be included in the valuation of these companies. Knowledge-based companies should not be judged by a single criterion.
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