I just realized that many people might still be confused about IPOs in reality because I used to be confused about this myself. So, is it really a good option for investors?

According to my research, an IPO or Initial Public Offering is when a company decides to sell its shares to the general public for the first time. The main purpose is to raise funds to expand the business and give the public a chance to own a part of the company. This is what makes many people interested in investing in IPOs.

The benefits of investing in IPO stocks are quite numerous, including confidence that the company is under the supervision of the SEC and the stock exchange, fair distribution of dividends, and importantly, high short-term profit potential if the economy is positive. Some IPOs have seen prices soar up to 200% according to statistics. However, it’s important to understand that this market is quite sensitive and requires thorough research of the company's profile beforehand.

But there are also disadvantages to be aware of. Companies that go public must disclose all financial information, including profit and loss statements and taxes, which competitors can also benefit from. Additionally, the costs of an IPO are not insignificant—covering internal system adjustments, consulting fees, investment banking fees, etc. Company owners may also need to share control with the board of directors.

Regarding the qualifications for a company to IPO, it must be a limited public company established under Thai law, with a stable financial position. Shareholders must hold at least 300 million baht worth of shares. The company’s operational results must meet certain criteria, such as a net profit of over 50 million baht in the past 2-3 years or a market cap exceeding 7.5 billion baht. The company must have been operating for at least 3 years under the same management team and must have approval from the SEC.

The preparation process for an IPO is quite lengthy. It starts with studying regulations, contacting financial advisors, preparing documents, converting from a limited company to a public limited company, setting the price, establishing a provident fund, appointing a registrar, then filing with the SEC. Many parties are involved in this process, including the Stock Exchange of Thailand, the Ministry of Commerce, auditors, legal advisors, valuation experts, underwriters, and financial advisors.

Pricing the IPO stock is very important because it affects the number of investors. Usually, IPO prices are set quite low to match the demand survey (Book Building) conducted specifically for this purpose.

If you want to check IPO stocks, you can visit the SET website, which lists companies under consideration and new IPO launches. The site also shows trading prices and par value. You can download additional files to study the fundraising purpose, timeline, trading volume, etc.

From an economic perspective, IPOs have both positive and negative impacts. If companies in key industries receive funding support, it can generate profits for the country and returns for investors. However, if companies do not raise funds through IPOs, they may face operational obstacles.

There are two ways to subscribe to IPO shares. The first is through the primary market, where companies announce via SET or their websites and brokerages. IPO prices are usually set quite low, often below market prices, providing investors with good returns. The second is buying after the company is listed (secondary market), which occurs after the IPO. Shares sold by initial investors may be priced much higher than the subscription price, so thorough company research is essential before deciding.

For example, if the founder owns 100% of 1.8 million shares with a par value of 2 baht, and the company decides to IPO by issuing an additional 800,000 shares at 15 baht, the company will raise 12 million baht. Afterward, the founder will hold 69.23%, and IPO investors will hold 30.77%. The shares are then listed on the stock exchange, and both founders and investors can trade in the secondary market. However, the company does not receive additional funds from these trades.

Overall, investing in IPO stocks is not about being skilled or unskilled but about knowledge and understanding. The more you study and learn, the higher your chances of success in investing.