Biggest IPO in

History

By EduCBA

Initial Public Offering

• A process where a private company sale its stock for the

first time to the general public

• A private company can be a new, young or an old

company.

Companies can raise equity capital in two ways:-

Issuing new shares to the public

• Existing shareholders can sell their shares to the public

• After IPO is released the shares are traded in the open

market

• It increases capital for the issuer and the company gets access to capital market for future

financing needs

• It creates a type of currency in the form of its stock which a business can use to make

acquisitions

• Going public will improve the company’s debt to equity ratio which helps company in getting

more favorable loan terms from lenders

• By going public the company and its management are able to retain a certain degree of control

• It result in promoting a company and the company can gain publicity and an image of stability

by trading publicly

• Public companies are able to offer stock options, which have the potential to substantially

increase in value

Reasons Companies Go For IPO

Rank Issuer (current name) Value of

issue

Listing date Exchange Issuer

country

Industry sector

1 Agricultural Bank of

China

$22.11B 07/16/2010 Shanghai and

Hong Kong

China Financial

2 Industrial & Commercial

Bank of China

21.98 10/27/2006 Hong Kong China Financial

3 AIA Group 20.39 10/29/2010 Hong Kong Hong Kong Financial

4 Visa 19.65 03/19/2008 New York U.S. Financial

5 General Motors 18.14 11/18/2010 New York U.S. Consumer, Cycle

6 Enel Spa 17.28 11/02/99 Borsa Italiana Italy Utilities

7 Facebook 16.01 05/18/2012 NASDAQ GS U.S. Communications

8 NTT Mobile

Communication Net

16.01 10/22/1998 Tokyo Japan Communications

9 Nippon Telegraph &

Telephone

15.3 02/09/87 Tokyo Japan Communications

10 Bank of China $13.65B 06/01/06 Hong Kong China Financial

Biggest IPO in history

A

B

C

D

Established in the year 1951

In 1970, bank evolved from a state – controlled commercial

bank to a wholly state – owned commercial bank and

subsequently a state controlled commercial bank

In January 2009, the bank was restructured into a

joint stock limited liability company

In July 2010, the bank was listed on the Shanghai Stock

Exchange & the Hong Kong Stock Exchange, transforming

the bank into a public shareholding commercial bank.

First Biggest IPO in history

A

B

In 2012 , Fortune Global 500 ranked the bank no 84 & The

Bankers “ Top 1000 World Banks” ranked this bank no 5 on

basis of profit before tax for the year 2011

First Biggest IPO in history

Assigned to Rating Company

The bank’s

issuer

A/A-1 Standard &

Poor’s

The bank

deposits

A1/P-1 Moody’s

Investors Service

The long-/short-

term foreign-

currency issuer

default ratings

A/F1 Fitch Ratings

A

B

C

D

In 2010, “A” shares of Agricultural bank of China was

listed on the Shanghai Stock Exchange.

Per share cost was set in the range of 2.7RMB - 3.3RMB

The IPO Process for the Shanghai portion was handled by

the companies like CICC, Citic Securities, Galaxy and

Guotai Junan Securities.

Including China Life Insurance and China State Construction

with a lock-up period of 12–18 months, ABC sold about 40%

of the Shanghai offering to 27 strategic investors.

First Biggest IPO in history

A

B

C

D

In the year 2010, “H” shares of Agricultural bank of China

was listed on the Hong Kong Stock Exchange. Per share

cost was set in the range of HK$2.88 - HK$3.48.

On July 6, 2010, from Hong Kong stock exchange ABC

raised US$19.21 billion before overallotment options were

exercised.

For Hong Kong Offering 11 Investors were selected including

Qatar Investment Authority and Kuwait Investment Authority,

taking a combined $5.45 billion worth of shares.

First Biggest IPO in history

The IPO Process was handled by CICC, Goldman Sachs,

Morgan Stanley, JPMorgan, Macquarie, Deutsche Bank &

ABC's own securities unit.

First Biggest IPO in history

• On July 7, 2010 the company had set the final share price for the

IPO launch.

• Despite a 15 month low for the Chinese benchmark index, the IPO

went smooth and ABC officially completed the IPO process after

both Shanghai and Hong Kong's over-allotments were fully

exercised on August13, 2010 and became the world’s largest first

time share sale raising an initial public offering of $22.1billion and

thereby surpassing the one set by Industrial and Commercial Bank

of China in 2006 of US$21.9 billion.

Current Financial ratios i.e. 2013

4.74 4.68 4.68

28.52 15.36

85.15

107.88

17.92 11.92 1.73

020406080

100120

Biggest IPO Companies in history

P/E

P/ E ratio is calculated as

Market Price per share/

Earnings per share

P/E Multiple ratio suggest

how much an investor is

willing to pay per dollar of

earnings

A high P/E ratio suggests

that an investor is expecting

a higher growth in the

earnings of the company &

Vice versa

Current Financial ratios i.e. 2013

1.67 2.1

11.23

0.37 0.43

22.93

1.65 0.6 05

10152025

Agricultural Bankof China

Industrial &Commercial Bank

of China

Visa General Motors Enel Spa Facebook NTT MobileCommunication

Net

Nippon Telegraph& Telephone

Biggest IPO Companies in history

P/Sales

Calculated as

Price / Sales Suggests the value

which is placed on

each dollar of a

company’s sales or

revenues

A high ratio means an

overvalued company &

a low ratio means

undervalued company

To conclude on a

company's valuation

one must check its

industry’s &

competitors

performance.

Current Financial ratios i.e. 2013

Calculated as

Current closing

stock price/Latest

Quarter book

value per share.

Low Price / book value

of a company means

that it is undervalued.

It could also imply that

a company is

fundamentally weak

We can see that

Facebook has the

highest price to book

value and Nippon

telegraph & telephone

has the lower.

To conclude on a

company's valuation

one needs to check its

industry’s &

competitors

performance.

.

0.93 0.98

5.24

1.39 1

11.65

0.77

0

5

10

15

Agricultural Bank ofChina

Industrial &Commercial Bank of

China

Visa General Motors Enel Spa Facebook Nippon Telegraph &Telephone

Biggest IPO Companies in history

P/Book value

Current Financial ratios i.e. 2013

Calculated as

Share Price/Cash

flow per share

Ratio suggests the

market expectations

for the future financial

health of the company

A high would imply

that the market expects

a good financial health

of the company in

future

We can see that

Facebook has highest

ratio & Nippon

telegraph & telephone

has lowest. This varies

as per the industry.

4.52

24.65

3.26

71.87

5.98 2.4 0

20

40

60

80

Industrial & CommercialBank of China

Visa Enel Spa Facebook NTT MobileCommunication Net

Nippon Telegraph &Telephone

Biggest IPO Companies in history

P/Cash flow

Current Financial ratios i.e. 2013

Calculated as net

profit/net sales

Ratio suggests that

how much out of every

dollar a company

keeps in its earnings

A high profit margin

would mean that the

company is highly

profitable

It is one of the best

ratios to look at when

you are comparing

companies in similar

industries.

34.82 44.14 42.14

3.43 2.33

19.05 11.49

6.95

38.95

01020304050

AgriculturalBank of China

Industrial &Commercial

Bank of China

Visa General Motors Enel Spa Facebook NTT MobileCommunication

Net

NipponTelegraph &Telephone

Bank of China

Biggest IPO Companies in history

Net profit margin

Current Financial ratios i.e. 2013

Calculated as

Net income /

Shareholders

equity

Measures how much

profit a company has

generated with the

money which the

shareholders have

invested

Higher the ratio

better it is for the

company

We can see that

industrial and

commercial bank of

china has the highest

ROE

20.98 22.43 18.59

11.54

1.11

10.95 9.36 6.76

0

5

10

15

20

25

Agricultural Bankof China

Industrial &Commercial Bank

of China

Visa General Motors Enel Spa Facebook NTT MobileCommunication

Net

Nippon Telegraph& Telephone

Biggest IPO Companies in history

Return on Equity

Stock Price Return

We can see that Visa Inc. was on 4th rank in top

10 Biggest IPO in history according to the value of

issue but this stock has given the highest return to

investors i.e. a return of 77.95% to an investor

who must have invested in its IPO when it was

launched.

Represents the growth in the share price of a

company till today’s current stock price i.e.

26, February 2014.

0.19%

2.16%

2.48%

5.62%

5.96%

12.20%

29.80%

77.95%

0.00% 20.00% 40.00% 60.00% 80.00%100.00%

Facebook

Enel Spa

General motors

Agricultural bank of China

Bank of China

Industial & Commercial Bank ofChina

AIA group

Visa INC

Stock Price Return

Stock Price Return

For Facebook we can see that although the above

ratios like Price / Earning , P/BV, P/Sales, P /

Cash flow has performed really well but a person

who must have invested in Facebook has got a

return of 0.19% till todays date

Agricultural Bank of China being on the 1st

rank in top 10 Biggest IPO in history according

to the value of issue but the investor who must

have invested in its IPO on the date of launch

has just got a return of 5.62% till todays date.

0.19%

2.16%

2.48%

5.62%

5.96%

12.20%

29.80%

77.95%

0.00% 20.00% 40.00% 60.00% 80.00%100.00%

Facebook

Enel Spa

General motors

Agricultural bank of China

Bank of China

Industial & Commercial Bank ofChina

AIA group

Visa INC

Stock Price Return

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