Disclaimer: Я не эксперт в области проведения IPO. I'm interested in this topic, that's why, I decided to figure it out for myself. She expresses only my opinion and cannot be interpreted in any other way.
I want to consider the topic of an IPO, which are now becoming fashionable for tech companies. And have always been a tool for raising capital for companies from different industries..
Take Milkiland as an example..
Milkiland N.V. owns 100% in DP "Milkiland-Ukraine", which unites 10 processing plants and four agricultural firms, as well as 75,23% shares of the largest in Russia JSC "Ostankino Dairy Plant".
Milkiland at the end 2010 of the year held an IPO on the Warsaw Stock Exchange, during placement and attracted about EUR59.41 million.
Now let's go back a little. To the cost of the IPO.
По сообщению компании IPO cost is:
- underwriter's remuneration. The cost of services for European exchanges is on average from 3 to 4% from the funds raised, for US exchanges - from 6,5 to 7%;
- costs of hiring consultants (legal consulting, аудит, PR consulting) – от 3 to 6% от стоимости размещаемого пакета акций;
- listing cost (payment for exchange services). The amount of remuneration depends on the chosen exchange, but, usually, equal to no more 0,1% от стоимости размещенного пакета акций. For example, expenses, related to the placement of a block of shares worth up to $100 million, on the London Stock Exchange are about $60 thousand;
- costs of disclosing information to public investors;
- creation of a department for the preparation of financial statements in accordance with IFRS. These costs include the cost of recruiting (estimated - up to $50 thousand).
Indirect costs must also be taken into account.:
- an increase in the tax burden as a result of the creation of a transparent financial model;
- tax losses when changing the legal structure of the company;
- implementation of a corporate information system to automate the process of preparing financial statements;
- costs of reorganization and improvement of corporate governance procedures (payment for services of independent directors, development of a code of corporate conduct);
- creation of compensation and remuneration committees, internal control, as well as investor relations.
Average costs, related to the placement of shares on the New York or London stock exchanges, constitute 10% of the cost of the funds raised. However, they can be significantly higher: for example, in the case of Rambler Media, the costs were about 15%, а Highland Gold Mining – 22%.
Back to Milkiland.
Along , Milkiland's IPO expenses amounted to EUR2.9 million. What is about 5%. Considering that the placement took place in Poland, where the cost of placement is lower than London and the USA, and along the upper border. Then we can confidently say that the cost of an IPO directly varies for each company individually and is about 5-10% of the attracted amount.
But how much does it cost to prepare for an IPO who knows?
