What is an IPO?

IPO stands for Initial Public Offering,

which is the process in which a company offers its shares to the public and gets them listed on a stock exchange for public trading for the first time. There are many reasons why companies list their shares: they may need to raise capital, pay off debts or enhance their profile and image. 

Together with the investment bank arranging the IPO, the listing company decides on how many shares it wishes to offer, after which the investment bank proposes a suitable price for the shares. The investment bank also prepares all statutory documents relating to the IPO, including the listing prospectus. Approval for the listing prospectus must be sought from a supervisory authority, which is determined by the company’s domicile. Usually it’s the local financial supervisory authority.

Remember that you may not receive all the shares you subscribe for

Investors participating in an IPO must indicate how many shares they wish to subscribe for. However, you may not receive the full number of shares you indicated in your subscription. The number of shares allocated to you depends on how popular the IPO is and on the number of shares offered. If there is demand for more shares than are offered, you may end up receiving only a certain percentage of the number you subscribed for.

Participate in IPOs in Nordea Investor

You can subscribe for shares through Nordea Investor during an initial public offering (IPO), and have them recorded on your book-entry account or equity savings account. Please read the IPO documents carefully before subscribing.

If you’re interested in participating in a SPAC IPO, you can do it here.

What is in it for me?

The benefit of investing in an IPO is that you are able to buy it in the first stage of the listing. Generally speaking the price you pay for each share in the IPO is lower than the initial price of the share first day of trading. You can say that you receive a “discount” when attending in an IPO. If the share price increases over time it is better that you bought your shares at a lower price.

What risks are there?

When investing in an IPO you should understand what you are investing in. What are the future estimates for the company? What is the reason behind the IPO? There is no guarantee that a new listed company will make profit in the short run. The share price can also decrease after the listing.