Analyzing an IPO

Hello guys,

This is my first post in AF.

Anyway, There is an IPO in my country “Bahrain” for a telecommunication company called Zain, and I would need your help in answering some questions.

I just want to know how the shareholders equity section is going to be after the IPO.

The company currently is having the following shareholders equity section ( Amounts in Bahraini Dinar “BD” )

Share capital 32,000,000.00 Share premium 100,000.00 Statutory reserve 9,675,000.00 Retained earnings 8,208,000.00 Total equity 49,983,000.00

Prior the IPO the company used to have 32,000,000 shares, but privately held.

So each share have 1 BD par value.

In the IPO they are going to sell 48,000,000 shares, each one for 0.190 BD, for a total amunt of BD 9,120,000.

This 0.190 per share is including 0.100 as par, and 0.090 as share premium.

The BD 9,120,000 is for 15% of the company shares only.

Now, my questions are:

1- Prior the IPO the Par per share was BD 1, but after the IPO it is going to be BD 0.100 per share, is that normal? Is it technically like they made 1:10 split before the IPO?

2- After the IPO, how the equity section is going to be? is it just to increase the share capital by (0.100*48,000,000= BD 4.8m), and increase the share premium by (0.090*48,000,000= BD 4.32m)?

3- If the current ratio is less than 1, is there a probability that the reason behind the IPO is to get some cash for the working capital?

4- The total number of shares that I sould use to calculate the EPS should be adjusted for the IPO, right? they are offering 15% for 48m shares, which means the 100% shares are 48m/0.15 = 320m shares. Is that correct?

5- in order to estimate the leading earnings, I am going to take the % increase in the equity section (50m+9m)/50m=1.18 , then estimated leading earnings = last period earnings * 1.18 * Expected growth Is it a correct way to do it?

Those are my questions for now. I would really appreciate your help.