I was looking into a random IPO recently. The company that I was reading about was VIT. Their market cap (MC) today is ~$218M. According to http://www.tradingmarkets.com/.site/news/Stock%20News/907091/ , their successful IPO raised $65M. According to http://www.streetinsider.com/IPOs/VanceInfo+Technologies+(VIT)+Sees+I… their IPO price was $8.50/share, and they sold 7.65M shares. Therefore, they raised exactly $65,025,000 worth. This occured on December 14th, 2007, which was about one month ago. However, today, the MC of this company is ~$218M, and the share prices are *LESS* than they were during the IPO. They price at $6.07/share now. Moreover, on their IPO, there were 7.65M shares, but today, according to http://finance.google.com/finance?q=vit , there are 36.05M shares. Here are my questions: 1. Since they didn’t have any secondary offerings, it really seems that they released 36.05M shares during their IPO(?). How do these analysts figure out that they raised $65M and not $306.4M (36.05M * $8.50/share) ? 2. Why is there such a HUGE discrepancy between 36.05M shares (which is what they have today) and 7.65M shares (which is how much they sold at IPO)?
i just looked over this very briefly but what you’re ignoring is the shares being retained by insiders who will still retain a significant stake post IPO. go look at the prospectus in edgar http://www.sec.gov/Archives/edgar/data/1417961/000119312507263665/d424b4.htm page 7 there is a section called “the offering” page 115 there is a section called principal and selling shareholders management owns a hefty chunk, and PE/VC owns a lot too. dont have time to go thru all the details but this should set you on the right track.
IPO’s typical sell 25-35% of the company. As mentioned by stylemog, the remaining portion is previous investors and company insiders.
So I think that it’s safe to say that the institutional investors and the people who subscribe to the IPO shares have almost no effect when it comes to voting. The entity which ownes 65%-75% are the employees/corporateInsiders. They probably vote differently than the institutional investors.