Have you ever wondered how institutional investors decide whether to invest in an IPO or how retail investors grapple with a 200+ page prospectus? If so, read ASIC's recent Report 540 Investors in initial public offerings.
ASIC's research found that institutions will not invest without the opportunity to assess management's performance. They rely heavily on the prospectus because directors have potential liability for the document.
Retail investors want more information on management and some struggle to understand the standard disclosure on how directors' past performance and skills will translate into results.
The investor feedback may be useful for prospectuses and other investor communications you prepare.
Why do research on investors in IPOs?
IPOs are an important part of Australia's capital market and ASIC is very active in the sector. We review large IPOs closely and often have to intervene in IPOs at the smaller end of the market due to poor disclosure. If we have significant concerns about an offer, we do more intensive surveillance on the prospectus and its preparation.