I just noticed that many people are becoming more interested in IPOs. So, what exactly is an IPO? Why is it such a big deal in the investment world?

Actually, an IPO (Initial Public Offering) is the process in which a company decides to open its doors to the general public, so they can become partial owners of the company through its first share offering. It’s not only about raising capital to develop the business, but it also helps build confidence in the public. Because a company that goes public through an IPO must pass strict examinations by regulators (the SEC) and the stock exchange.

The real reason investing in IPOs is so interesting is that you can buy shares at a relatively low price before they enter the stock market. Often, IPO share prices can jump by several times once they are listed. I’ve seen cases where the stock surged to 200%. At the same time, IPOs are considered a relatively safe channel because the company’s operations are under government oversight, and investors are protected by law.

However, we also have to acknowledge that there are downsides. Companies going for an IPO must disclose their financial information to the public, which competitors could potentially take advantage of. In addition, the costs of preparing for an IPO are very high, from legal advisory fees, to accounting audits, to investment banking fees.

For a company that wants to go public via an IPO, it must meet several basic requirements, such as being registered as a public limited company, and having a stable financial position. Shareholders’ equity must be no less than 300 million baht. Operating results must meet the set criteria—for example, net profit in the most recent year must be more than 30 million baht, or the market capitalization based on market price must be more than 7,500 million baht, depending on the criteria selected. In addition, the company must have an operating history of more than 3 years and must receive approval from the SEC.

The preparation process for an IPO is quite lengthy. It starts with studying regulations, contacting financial advisors, preparing various documents, converting into a public limited company, setting the share price, establishing a provident fund, and finally submitting the Filing to the SEC. There are many parties involved in this process, including the Stock Exchange of Thailand, auditors, legal advisors, the Securities Depository Company (TSD), and underwriters.

Setting the IPO share price is extremely important, because it affects the number of investors who are interested. Most of the time, IPO prices are set relatively low to attract investors and to be consistent with demand survey results (Book Building).

If you want to find information about IPOs, go to the SET website, where you can see the list of companies that are under consideration and companies that have newly launched IPOs. The website will display the PAR price and the IPO price, which will help you plan your budget. You can also download additional files about the purpose of fundraising, the offering period, and the value of trades.

When it comes to the impact on the economy, IPOs are an important tool for helping companies with strong potential expand their businesses. This creates jobs, increases productivity, and generates profits for investors. For example, in the tourism sector, if businesses receive funding support through IPOs, it can help them grow and benefit the country.

As for how to apply for IPO shares, there are two types. The first is pre-market subscription (Primary Market), where prices are relatively low during this period, and this is the channel most investors want to subscribe through because it offers a higher chance of profit. The second is buying after the company has entered the market (Secondary Market), which is trading between investors. Prices in the market may be even higher than the IPO price by another multiple.

Here is a practical example to illustrate how it works. Suppose the company’s founder holds 100% ownership with 1,800,000 shares, with a PAR value of 2 baht, for a total investment of 3,600,000 baht. When the company decides to IPO and issues an additional 800,000 shares at an IPO price of 15 baht, the company will receive 12,000,000 baht in funding. The founder’s shareholding will decrease to 69.23%, while IPO investors hold 30.77%. After that, the shares are listed on the stock exchange, and everyone can buy and sell.

In summary, an IPO is a great opportunity for investors who want to take part in a company’s growth and receive satisfying returns. Whether you’re a beginner investor or an experienced one, the key is to study and thoroughly understand the company’s information. The more you learn, the greater your chances of succeeding in your investments.