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IPOs, Investment Banking and Debt Restructuring
Rating: 4.7 out of 5(509 ratings)
1,769 students

IPOs, Investment Banking and Debt Restructuring

Learn the process of raising capital from public and private markets and other investment banking activities
Created byProfEd Academy
Last updated 3/2021
English

What you'll learn

  • Process of raising capital in the public markets (Initial Public Offering (IPO), seasoned equity offering, shelf registration)
  • Raising capital in private markets (private placements)
  • Revenue generating activities in investment banking
  • Why public listed companies choose to go private
  • Considerations in choosing the maturity of debt issuance
  • Calculating the net present value of bond restructuring/refunding
  • Risk in project financing and its benefits

Course content

7 sections • 33 lectures • 2h 5m total length

  • The Financial Life Cycle of a Start-up Company: Angels and VCs4:16
  • The Decision to Go Public: Advantages and Disadvantages7:12

    Explore the advantages and disadvantages of going public, including increased liquidity, founder wealth diversification, easier capital raising, and the reporting costs and disclosure requirements that accompany regulation.

  • Selecting an Investment Bank as Lead Underwriter2:49

    Learn how companies go public via an IPO, select a lead underwriter in a bake-off, and how banks price, allocate shares, and sell to investors.

  • The Underwriting Syndicate4:32
  • Regulation of Securities Sales3:53
  • The Roadshow and Book-Building2:48

    Conduct a roadshow to institutional investors, collect indications of interest via book-building within the registration price range, and adjust the offering price based on demand during the quiet period.

  • Setting the Offer Price14:45

    Explore how issuers and underwriters set the offer price for an IPO, balancing pre- and post-IPO value, underwriting spread, and new versus existing shares in two scenarios.

  • The First Day of Trading6:26
  • The Costs of Going Public4:03
  • The Importance of the Secondary Market4:23

    An active secondary market lets pre-ipo shareholders cash out and boosts liquidity, aiding future capital raises and making employee stock options more attractive.

  • Regulating the Secondary Market4:07

    Regulate secondary markets with the SEC to maintain liquid, crime-free trading by overseeing exchanges, insider trading, market manipulation, and proxy statements, while monitoring margin requirements and protecting investors.

  • Questionable IPO Practices1:57

    Examine how investment banks allocated hot ipo shares to executives, enabling spinning during the dot-com era and prompting regulators to fine firms for bribery-like practices.

  • Equity Carve-Outs2:58

Requirements

  • Basic understanding of finance concepts, such as time value of money

Description

Companies need capital to keep its operations going and to expand their business. Different avenues exist in raising capital through public markets or private markets. Each method of raising capital has its pros and cons which the company has to consider carefully, as the choice will affect the company's weighted average cost of capital, profitability, liquidity, and solvency.

The course starts by looking at the financial life-cycle of a company, from start-up to corporation. At each stage, the type of financing will differ. If the company decides to go public, it can do so via an initial public offering (IPO) which is the more popular way. Setting the offering price is a very important aspect of the IPO and we will explore different methods of calculating the offering price.

Next, we will look at different activities that generates revenue for the investment bank, from M&As to trading operations.

Public listed companies may decide to go private and the course explores the advantages of doing so.

If the company decides to issue debt to fund capital projects, then it must choose a maturity for its debt and there are different considerations. Companies may also decide to restructure its existing bond issue and refund it at a lower rate. You will learn to calculate the components required to arrive at the net present value of the bond refunding.

Finally, the course looks at the risk structure of debt in project financing and its potential benefits for borrowers and lenders.

Who this course is for:

  • Those who wants to understand how capital is raised in public markets and private markets
  • Those who wants to understand the initial public offering (IPO) process

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