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Pre-IPO & IPO Opportunities

Pre-IPO and IPO opportunities allow eligible investors to consider companies before or at the point of listing on a securities exchange. FPW researches these opportunities and presents the business case, stage and key risks in a clear and balanced way.

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01 / DEFINITIONS

What is a
pre-IPO investment?

A pre-IPO investment is an investment in a private company made before it lists its shares on a public exchange. Pre-IPO rounds are commonly used to fund growth, strengthen the balance sheet or bring in cornerstone investors ahead of a proposed listing.

In Australia, many pre-IPO offers are made only to wholesale or sophisticated investors under the Corporations Act. A proposed listing is an intention, not a certainty.

02 / DEFINITIONS

What is
an IPO?

An initial public offering (IPO) is the process by which a private company first offers its shares to the public and lists on a securities exchange such as the ASX. The offer is typically made under a prospectus lodged with ASIC, which sets out the business, financial information, offer terms and key risks.

Once the offer closes and shares are allocated, the company lists and its shares can be traded on market.

03 / THE PROCESS

How private companies
become public.

01

Preparation

The company strengthens governance, reporting and financial controls, and appoints advisers such as a lead manager, lawyers and accountants.

02

Pre-IPO capital

Some companies raise capital from private investors before listing to fund growth or listing costs.

03

Due diligence

Advisers examine the business, financials and risks, and the offer document is prepared.

04

Offer period

The prospectus is lodged, investors apply for shares and the offer price is confirmed.

05

Allocation

Shares are allocated to applicants, which may involve scaling back where demand exceeds supply.

06

Listing

The company is admitted to the exchange and its shares begin trading.

04 / MOTIVATION

Why companies
consider an IPO.

  • To raise capital for growth, acquisitions or debt reduction
  • To provide liquidity for founders and existing shareholders
  • To broaden the shareholder base
  • To raise the company's profile with customers, partners and employees
  • To gain access to public capital markets for future raisings

05 / BALANCED VIEW

Why investors consider
pre-IPO opportunities.

Potential benefits: exposure to a company at an earlier stage of its development, the possibility of benefiting from growth before listing, and access to businesses and sectors not yet represented on public markets.

Potential risks: the listing may be delayed or not proceed; shares may be illiquid for an extended period; valuations are harder to assess; escrow may apply after listing; and early-stage companies can fail. Higher potential returns come with a wider range of outcomes, including loss of the entire investment.

06 / KEY RISKS

What investors
need to understand.

01

Allocation and availability

Availability varies between offers. Demand can exceed supply, allocations may be scaled back and participation in one offer does not imply access to future offers.

02

Liquidity

Private company shares generally cannot be sold on an exchange and may be subject to transfer restrictions. Capital may be committed for an uncertain period.

03

Valuation risk

Private valuations are often negotiated and may be difficult to assess. The IPO price may be higher or lower than the pre-IPO price.

04

Dilution

When a company issues new shares, existing shareholders' percentage ownership falls. Further raisings before or at the IPO can dilute pre-IPO investors.

05

IPO market risk

An IPO does not guarantee any particular performance after listing. Shares can trade below the offer price from the first day.

06

Escrow

Pre-IPO shareholders may be required to hold shares for a period after listing, during which they cannot be sold.

07 / BEFORE PARTICIPATING

Due
diligence.

Before participating in any pre-IPO or IPO opportunity, investors commonly consider:

  • The business model, revenue and path to profitability
  • The experience and track record of directors and management
  • How the valuation has been determined and how it compares with peers
  • The use of funds and the proposed listing timetable
  • Share rights, escrow arrangements and transfer restrictions
  • What happens if the listing does not proceed
  • Eligibility requirements and minimum investment amounts
  • How the investment fits within a broader, diversified portfolio
Insights on pre-IPO investing Contact FPW

AT A GLANCE

01

Pre-IPO rounds

Capital raisings undertaken by private companies ahead of a proposed listing.

02

IPO participation

Information on initial public offers, including offer terms and timetable.

03

Company research

Background on the business, its sector, management and stage of development.

04

Eligibility

Some offers are available only to wholesale or sophisticated investors under the Corporations Act.

FREQUENTLY ASKED QUESTIONS

Pre-IPO & IPO Opportunities
questions.

Who can invest in pre-IPO opportunities?

Many pre-IPO offers in Australia are available only to wholesale or sophisticated investors as defined in the Corporations Act. Eligibility depends on the specific offer.

Is a pre-IPO company certain to list?

No. A proposed listing is an intention. It may be delayed, restructured or cancelled depending on the company's circumstances and market conditions.

When can I sell pre-IPO shares?

Generally not until a liquidity event such as a listing or sale of the company, and even then escrow arrangements may prevent sale for a period after listing.

How is the pre-IPO price determined?

Pre-IPO prices are usually set by negotiation between the company and investors, with reference to the company's stage, financials and comparable businesses. They may be higher or lower than the eventual IPO price.

What is escrow?

Escrow is a restriction that prevents certain shareholders from selling their shares for a specified period after listing. It is commonly applied to founders and pre-IPO investors.

What is dilution?

Dilution occurs when a company issues new shares, reducing the percentage ownership of existing shareholders. It can occur in further private rounds or as part of the IPO itself.

Will I receive the full number of IPO shares I apply for?

Not necessarily. When demand exceeds supply, allocations may be scaled back or applications declined.

Does a strong first day of trading mean the IPO was a good investment?

Not necessarily. First-day performance is not a reliable guide to long-term performance. After listing, share prices are influenced by the company's results and market conditions.

How do I register interest in upcoming opportunities?

You can register your interest through the FPW contact page. Registering interest does not guarantee access to or allocation in any offer.

FURTHER READING

From FPW
Insights.

ImportantInformation on this website is general in nature and does not take into account your objectives, financial situation or needs. Investments carry risk, including the possible loss of capital. Past performance is not a reliable indicator of future performance. Consider seeking independent professional advice before making an investment decision. Key considerations: A listing may be delayed or not proceed; Early-stage companies carry higher risk; Shares may be illiquid before listing.

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