| Saturday, July 26, 2008 - 11:48 pm |
What are the considerations one should have in deciding whether to IPO a state corp?
For instance, I've got one profitable corp whose assets are $67M with no debt, but shoe "market value" is only $13M. I'm guessing an IPO there wouldn't get me the true value of the shares I gave up. Is that right? (And do I need to uninvite CEOs to make sure it doesn't get bought in whole for a pittance?)
But my question is more than about that one company. When do you IPO and when not?
| Saturday, July 26, 2008 - 11:50 pm |
Er, those numbers are billions, not millions.
| Sunday, July 27, 2008 - 01:58 pm |
Hopefully SFO Treasurer will weigh in on this one. He certainly seems a prolific IPO-er.
That said, I have offered shares in a number of my corps to split ownership between my country and enterprise. I have done it as there seem to be benefits to country-controlled public corporations as compared to wholly country-owned corps although I can't quantify them.
You don't need to worry about enterprises buying a controlling percentage of the shares (buying the whole corp for a pittance) as you can set portfolio targets (Share market > Set portfolio targets) so that you can retain, say, 60% of the shares.
Many of the shares will be sold to investment portfolios in other countries. These can never obtain a controlling percentage of shares.
As to when to IPO and when not, I haven't the foggiest. You can't offer shares in corps that have a low value or high price to earning ratio. Thus, I stick with the game rules and perform IPOs when it allows me.
| Monday, July 28, 2008 - 05:34 am |
The best time to perform an IPO is when your company is running low on cash, or if you want to pay off a loan, or if you want your country to "cash-in" by selling the shares in order to raise much-needed capital to purchase infrastructure, such as school, or roads, or maybe even another corp....There are many reasons to perform an IPO, but the goal is to garner cold hard cash
(someone correct me if im wrong on that. That's the assumption I make with this game. In real life companies will sell shares, or split, to sell off the extra shares to make a quick buck to...say....build a new facility or what have you. Wal-Mart does it all the time IRL)
| Monday, July 28, 2008 - 12:10 pm |
Hope SFO Treasurer catches this one too. I did one IPO and failed miserably with it, ended up getting the corp back as a private corp because no one bought any shares. However, I wasn't running a country then so I could do one or more now, if I was better informed as to what the best method is.
With regard to public corps that you own, there's a couple tricks to maintaining ownership AND getting top production. Don't have the specific figures at hand, but quality and productivity are increased dramatically in public corps which are at 25% ownership. Or maybe that's 24.99%, not exactly sure.
You can learn the tricks by going to the Church of SC site (thanks a bunch John Fire, learned a whole lot reading that site!)which you can access through the wiki.
| Monday, July 28, 2008 - 04:50 pm |
I only IPO a corp to my enterprises. Do this after the country scores are updated and investment funds will not buy any of the shares, so your CEO will get them all (unless you run into the "feature" that has been troubling Treasurer.)
But if you want to sell shares and don't care who gets them, you need to look at the PE. If the PE is low the shares will sell. If the PE is high, they won't sell.
If you want to maximize cash, do a small IPO, say 2% and then wait several months for the value to go up. Corp values of public corps go up faster. Then set your portfolio target at whatever percentage you want the the shares will auto sell.
Hope this helps.
| Tuesday, July 29, 2008 - 12:42 am |
Helped me. Thank you Adam. The problem when I did my (up to now) one and only IPO I offered 100% of the shares, and didn't have a country to use the investment fund.
I took an FMU corp with a market cap of over a tril, cash in hand of 130 bil, share price 10k, PE of 12, 100 mil shares. Funny, now I can LMAO about it. The first month it did a 2 for 1, no buyers. 2nd month another 2 for 1 bringing share price down to 2500, no buyers. 3rd month same, 4th month it ended up back in my private corps, except now it had a billion shares, a market cap of about 600 bil, and a share price of 625. Poor corp still hasn't returned to it's previous glory 2 RL months later.
Again, thanks Adam.
| Tuesday, July 29, 2008 - 05:33 am |
If you want to make the corporations truly public. Do an IPO of your EXISTING shares asap (the max first off offer is 15mil), now set the portfolio target for your country to whatever figure you want below 25% (I set it to 24.97%), then in the same month have your enterprise buy 23mil shares (if your order 24mil then you wont be able to set a portfolio target for enterprise between 24% and 25%, it just saves more hassle), (repeat if you have another enterprise) you will need to wait for your enterprise/s to gain ownership of some share to set the portfolio target. I'd recommend setting the enterprise/s portfolio target to 24.98-24.99%, and country target to .01% less then the enterprise target, this allows you to maintain maximum ownership of the corporation while keeping it truly public and making an enterprise the largest minority shareholder give the production tax income to your country. You don't have to do it that way, you could always create an IPO any time and set the country portfolio target to any figure under 25% but it makes your country less revenue and you have less security of ownership.
If you have an already public corporation thats up shit creek and wishing you could put some cash into it, you can in a tedious way. Hoping that you still can make IPOs in this corporations create a IPO with NEW shares then have your country/enterprise buy these new shares (because odds are the investment funds won't buy them) in result transferring your countries/enterprises cash into the corporation, the buying of these shares will create an artificial demand (speculation) increasing the price, which will probably allow you to create another IPO if needed. If you can't create an IPO you can probably buy shares that will be in high supply, doing this will hopefully allow you to create an IPO.
I don't know why you would want to create an IPO for Adams reason but his advise is the best for that result. If you want to sell off the corporation to gamemaster enterprise, then wait for the market value to become very high then simply create and IPO and set the portfolio target to 0%. This will slowly sell off shares creating a high return but probably not as high as possible if you were to micromanage.
If you don't know or have a reason to create and IPO then don't, they are a lot of hassle especially when you don't have a reason.