Problem Set 5: IPO Real-world Application
Oportun Financial Corp (ticker symbol = OPRT) completed their IPO on 09/26/2019. Complete the following information regarding this IPO. Upload a word document showing scanned images of what you find.
1. What is the Offer Price and number of shares offered?
2. Who are the underwriters for this company? How many shares has each underwriter decided to sell in an IPO?
3. What are the direct costs of the IPO to this company? Provide your answer in dollars and percentages.
4. What are the indirect costs of the IPO to this company?
1. IPO Calendar (provided by Nasdaq): https:
www.nasdaq.com/market-activity/ipos
This link contains basic information regarding IPOs by companies (includes past and upcoming IPOs)
2. SEC filings: https:
www.sec.gov/edga
searchedga
companysearch.html
Enter the company name or ticke
CIK and get access to all company filings.
We are interested in Form S-1 (which is the Registration Statement), Form S-1/A (the Amended Registration Statement, and Form 424B4 or 424B3 or 424B2 (contains information regarding the securities issued).
3. To quickly access SEC filings for an IPO company, you can go to IPO calendar provided by Nasdaq (see link in #1 above), select your IPO company, click on the company name, click on “Financials & Filings”, scroll down to Company Filings, click on “Link” to go to that particular SEO filing.
4. Yahoo! Finance website: https:
finance.yahoo.com/ contains information about post-issue price and stock data.
5. The SEC’s Office of Investor Education and Advocacy has issued an Investor Bulletin to provide investors with information they should consider when investing in the shares of a new public company. You will find useful beginner information about IPOs here: https:
www.sec.gov/investo
alerts/ipo-investo
ulletin.pdf
6. Calculating the direct costs of an IPO
After a company’s IPO registration statement has been declared effective, the company will typically file a final prospectus—usually identified as a 424B3 or 424B4 filing in the EDGAR database. The final prospectus generally includes information related to the final offering price.
Go to SEC filings: https:
www.sec.gov/edga
searchedga
companysearch.html. Enter the name of your company under Company Name and click on Search. Now click on Form 424B4 and open the html document.
Alternatively, you can click on the company name under IPO Calendar in Nasdaq.com website and then click on “Financials & Filings” to get the direct link to Form 424B4.
a. The underwriting discounts and commissions per share represents the direct costs of an IPO to the company in dollars.
. You can calculate the underwriting discounts and commissions per share in percentages as follows: Underwriting discounts and commissions per share divided by Price to public.
7. Calculating the indirect costs of an IPO
The indirect costs of an IPO to the company is the money left on the table, defined as the difference between the adjusted closing price on the first day of trading and the offer price, multiplied by the number of shares sold. This is the first-day profit received by investors who were allocated shares at the offer price. It represents a wealth transfer from the shareholders of the issuing firm to these investors.
Money left on the table = Indirect costs of an IPO = (Adjusted Closing price on the first day of trading – Offer Price)