Barclays Stockbrokers can help you take the next step in your trading. What are they and should you invest? A member of our UK-based Client Service Team will be happy to help you get started. They won't be able to give you advice on whether an investment is suitable for you.
If you're in doubt, please seek independent advice. A flotation is also known as an Initial Public Offering IPO or a new issue. It marks the first time a company sells shares to the public. An IPO may occur because smaller companies are looking to raise money to expand.
Larger companies may also be seeking to increase the number of shareholders, raise funds to make acquisitions, restructure their finances or raise capital. Sometimes, however, the reason for the stock market flotation is because existing investors are seeking to sell their stakes in a private company.
Or the government wants to raise money by selling shares in large national companies. Examples include British Telecom and British Gas in the s.
Government share sales often attract a great deal of interest from investors, including those who may not have much experience of investing in the stock market. This is because the companies tend to be large, well-known names and members of the public are invited to invest as well as financial institutions like pension funds. With the Royal Mail IPO of , almost a fifth of the shares were offered to private investors 2. In some cases, the government has offered incentives to encourage people to invest.
In , for example, the privatisation of British Telecom enticed over two million people thanks to discounts on the market price 3. It is crucial to recognise that all shares can fall in value as well as rise.
Investors in government share sales, just like any other IPO, risk losing some or all of their money if the company is performs badly in the future. Therefore, as with any other investment, you should only put money in if it fits in with your financial goals and you fully understand the risks. An IPO enables a company to become publicly listed on a recognised stock exchange, such as the London Stock Exchange LSE.
IPOs, including government share sales, usually work like this:. Investors tempted by an IPO will need to think hard about why the company is floating on the stock market.
Beyond these considerations, the potential pitfalls of IPOs mirror those of equities in general. The allure of stocks, whether you opt for IPOs or shares that are already on the exchange, is the possibility of higher returns than many other assets.
Equities may look especially tempting during periods when savings accounts offer very low interest rates — but the flipside is the potential for losing money.
Initial Public Offerings. What are they and should you invest? - Barclays Stockbrokers
Share prices can fall as well as rise and may be very volatile. Moreover, investing in shares through an IPO or any other individual shares means you will be exposed to the fortunes of one particular company. For many investors, a collective investment fund, run by a professional investment manager, may be the easiest way to invest in shares. These funds, if they contain stocks, can still fall in value as well as rise. However, they enable you to spread your risk over a larger number of companies without you having to invest a significant amount of money.
If, after weighing up the potential risks and rewards, you decide an IPO is suitable for you, you will usually need an account with a stockbroker or a wealth management firm to place your investment order. If you are in any doubt, you should seek independent advice.
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In some government share sales, special arrangements may apply. Also known as Initial Public Offering IPO , new listing or new issue.
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The approximate price of the shares that are to be issued, presented as a range. The official announcement by a company of its intention to become publicly listed. It outlines when the IPO is to take place and who may invest in it. The time during which investors can apply to buy the new shares. If demand is high, the offer period can close early.
Where the new shares are issued and sold directly to investors. Any trading after that takes place on the so-called secondary market — the stock exchange. Information relevant to the IPO published by the company.
Decisions on whether to invest should be based on the information contained in this. We do not provide investment advice. Sale of Shares [PDF, KB] 3 Sharing in success: Call costs to numbers may vary — please check with your telecoms provider. Calls may be recorded so that we can monitor the quality of our service and for security purposes. Our opening hours are 8am-6pm Monday to Friday excluding bank holidays and 9.
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We explain how an IPO works, and why you should think carefully before buying shares. Investor Zone Home Choosing an account Investment ISA General Investment Account Choosing a fund How to read a Fund Factsheet Multi Asset Class funds Citywire Selection Funds List Better Investor insight Investment ISA insight Fund insight Videos Jargon Buster Transfer to us Like to speak with someone?
There were 86 flotations on the London stock markets between January and early December 1 , and more are expected in the coming months. How IPOs work An IPO enables a company to become publicly listed on a recognised stock exchange, such as the London Stock Exchange LSE.
IPOs, including government share sales, usually work like this: First, the company announces its intention to float ITF.
When the IPO is launched, the company will publish a prospectus, pricing notification and other supplementary documents. This will detail comprehensive information about its business and plans for the future, including risks that might affect the company.
It also produces a guide price range, giving an indication of what it thinks the shares will cost. At this stage, investors can apply for shares in the IPO through an approved intermediary participating in the offer. Once the offer period ends — it may close early if demand is high — the company announces the price of the shares and notifies investors of the allocation they have received.
If demand exceeds supply, investors may not get all the shares they applied for. In that case, the company will show how it is scaling back allocations.
Finally, the company begins trading on the stock market, with investors able to buy and sell shares freely. There may be a period of conditional dealing which typically lasts for 3 days and is linked to the IPO deal settling on the stock market. At this time, purchases in an ISA are not permitted.
What to look out for Investors tempted by an IPO will need to think hard about why the company is floating on the stock market.Barclays Stockbrokers - How to withdraw cash
A glossary of IPO terms Flotation: HTMLContent2 Our service here at Barclays Stockbrokers is designed for investors who are able to make their own investment decisions and our platform offers a cost effective and convenient way to achieve this.