If you noticed mga kabarrio, sunod-sunod ang headlines about the Vista Land IPO about Manny Villar. Pramis, hindi ako ang nagsimula nang tsismis na to. In my mind, ki Manny Villar den during his interview with Karen Davila when he said he earned P10 billion which he is now using to fund his presidential campaign. (Source: Manny Villar’s P10 Billion Vista Land IPO proceeds)

But before you can have any appreciation sa mga pinag-uusapan nila dito, it’s important na you have some basic understanding kung ano ang IPO [pronounced: ay-pee-o hindi eeepo! haha]. Hindi mo na kelangang alamin masyado ang stock mean price or par value unless you intend to study investment accounting. Of course walang batas na nag-babawal for you to learn everything. Even better if you know, para di ka mapagalitang wala kang alam.

And so I was given an assignment to reduce the entire IPO course in one blog entry! Dyuskoday! Leche!

But I don’t mind. I have a country to save. Di ba?

So, ang goal ko, is to translate the IPO eklavu in a language hoping na maintindihan nang mga non-finance people. Most of what I will be discussing are basic IPO stuff at pag naperfect ninyo ang sinulat ko, do not ever ever ran straight sa trading floor nang stock exchange at pag-dedekwatin lahat nang Jolibee stocks dahil I am not giving you a financial advice. Clear?! Besides, binalik na ba nila ang tunay na sawsawan nang bayan?!

Let’s begin.

Alam nyo mga kabarrio, hindi lang sari-sari store ang mga companies saten. Basically, there are two (2) broad categories nang companies. Private achaka public. Its so easy to distinguish one from the other. Public dahil ang shares of stocks nya are traded on the stock exchange, private dahil hindi. Ganun lang. O di ba? Who told you na napahirap nang investment accounting? Niyayanig lang kayo nang iba dyan noh, kinalambre naman kayo. Tse!

Shares?! Stocks?!

Blurry ang peklat nang dalwang to, but the bottom line is, they mean the same thing. In essence, mga papel de liha lang yan na nagpapatunay na you own a certain percent nang isang company. Ang tunay na tawag sa papel na yan is “stock certificates” hindi sachet.

Private?

Kaya sila tinawag na private companies or privately held companies dahil they have fewer investors, wala masyadong dini-disclose na information about the company and as you’ve learned above, kung meron man silang shares (yong iba ang tawag ay partnership units), they are not traded sa stock exchange.

Private companies are very easy to put up. Dito sa Amerika, sandamukal ang websites that with one click, incorporated ka na. So, if you want to put up a private company, put in the money, file all the legal paperwork, follow all the reporting requirements, chienes ka na. Now, if you want to invest in a privately held company, kelangan mong maki-social climb sa owner, pero wez silang obligation to sell you anything. Kaya you have no right also to make angal. Private eh.

Public?

Sa public naman mga kabarrio, typically, isang batalyon ang investors nila. This is the reason why they follow strict rules and regulations. Besides, kahit na sinong kulapo anywhere in the world can invest. Kahit Nigerian 419 investors pa. Who knows. For as long as they can buy your stocks, kiver ka na dun. Nakakaloka ang reporting requirements and compliance reporting nito, especially after the so many Wall Street financial scandals. Dito nagbunga ang tinatawag na Sarbanes-Oxley. Dala nang mga katarantaduhan nang mga impaktong magnanakaw. Kawawa yong mga small public companies dahil they have to pay astronomical professional fees to comply sa Sarbanes-Oxley requirements. Nah – hindi mo na kelangang alamin to. Sumemplang lang ako.

Anyway, sa public companies mga kabarrio, you must have a set of Board of Directors, you must file regular audited financial statements. Lastly, dahil public, ang shares of stocks nya are traded sa stock exhange. Kaya pag public na ang company mo, kahit mortal mong kaaway, pwedeng maging owner nang company mo, at wala kang magagawa! Hahaha!

So now, kung pagod ka na sa closet for being private, you wanted out na and go public para you can have more money for capitalization. Building improvements? New machineries and equipments? More acquisitions? New products on the pipeline? Cosmetic surgery perhaps?! Botox?! Hahaha!

Unfortunately, me mga matitinding seremonyas bago ka makalabas sa closet. You need one serious masinsinang usapan with your investment advisors kung tugma sa company mo to go public. Why? It involves money, it involves time and nakuuuu!!! Walang tulugan toooo, maniwala kayoo!!! And get this! Parating domino’s pizza ang dinner mo. Hmpt!

So, kelangan mo nang mga CPA’s or independent accounting firm to review yong mga financials mo. Besides, kelangan mo rin sila to determine the initial price nung offering mo.

Kelangan mo nang lawyers to guide you sa legal maze in doing IPO. Tandaan, heavily regulated to nang Securities and Exchange Commission, nang BIR (or IRS samen) at nang Philippine Stock Exchange. Sa America, marami pang mga State requirements. Sa Pilipinas, balita ko ultimo Barangay Captain me requirements den haha! Charing lang.

Por ejemplo, ang pinag-iinitan nang current headlines about the Vista Land IPO is the 180-day rule. Pero let’s talk about that in another entry.

Pero more importantly, kelangan mo nang mga underwriters at mga syndicators. Ansama nang mga terms di ba? Oh. Terminologies lang yan. Wag kang mayanig. Ganito.

Underwriting. Hindi sya under the table pero marami nangyaring under the table transactions like price manipulations and all.

Syndications. Hindi sya sindikato, pero maraming mga sindikatong kumana nang pera dito. Tandaan nyo ang Enron? Global Crossing? Maddox? Hahaha! Sorry, sumemplang uli ako.

Anyway, sa underwriting mga kabarrio, eto yong process to raise capital from investors on behalf of the company na nag-a-IPO. Pag mga ilang investment banks ang gumagawa nang process na to for you, syndication ang tawag dun. So in essence, pag sinabing you are underwriting a transaction, you are distributing or selling the stocks sa mga investors.

As an underwriter, you earn income sa tinatawag na “underwriting spread” parang patong sya sa original price nang nag-issue nung stocks. Yan yong price difference sa makokolekta mo sa mga investors. Gets? To summarize: yong underwriter subscribes (underwrites) for the shares and then sells them to his clients (investors). Ganun lang yon.

Now, after the IPO, the shares will now be traded on a stock exchange. The end na ang pagiging private mo. You are now a public company.

At dito nagtatapos ang kursong walang matrikula.

Any QUESTIONS? Feel free. I hired Financial Advisors na mga tiga Pilipinas to assist me! Nyahaha!

To learn more on IPO, there are a lot of sites on the internet to visit. But here are Reyna’s recommended sites. I pulled some stuff here for my explanation:

1.) Investopedia
2.) How stuff works

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reynz is one Uragon and a Filipino-American, has many years of public accounting & auditing, broadcast investments, housing tax credits and equity investments as his background. Based in the US, he maintains his personal and humor blog at reyna elena dot com. A graduate of Aquinas U, he went to GWU and Temple U in the United States.