An Initial Public Offering or IPO is an effort made by a company to raise fresh capital through the Indonesia Stock Exchange (IDX). Through an IPO, a company will offer and sell its shares to the public for the first time. The objectives of an IPO are varied, ranging from business expansion to increasing company valuation to other funding needs.

However, before purchasing IPO shares, investors need to understand and study important company documents, including prospectuses and financial reports. These two documents provide important information about the company’s business model, financial condition, business prospects, and details of how the IPO funds will be used.

Therefore, consider the following before deciding to purchase IPO shares:

   I. Important IPO Documents

1. Prospectus

A prospectus is an important document containing information about the company, including general information about the initial public offering, capital structure, use of company funds, company performance assessments, and much more. By reading the prospectus, investors can learn more about the company’s condition and decide whether or not to invest in the company.

   2. Financial Statements

Financial statements are reports that contain explanations of the company’s financial condition at the time the company conducts its initial public offering. With financial statements, investors can find out information about the company’s income, sales growth, and accounts receivable. These things are needed as considerations for investors to buy shares during an IPO.

   II. Investor Steps When Ordering IPO Shares

When you want to buy IPO shares, you can place orders through the Profits Anywhere app. When placing an order, here are the steps you will go through:

1. Initial Offering (Bookbuilding)

During the initial offering or bookbuilding period, investors can place orders for IPO shares, but the share price ordered is still within the range determined by the company. In this bookbuilding stage, which runs for 7 to 14 business days, the prices offered by investors will determine the final price of the IPO shares offered during the public offering.

   2. Public Offering (Offering or Pooling)

The public offering stage lasts for 3 to 5 business days. At this stage, the IPO share offering price has been finalized so that investors can prepare funds to purchase the shares.

   3. Securities Allotment Status (Allotment)

At this stage, the company will allocate shares to investors who have subscribed to the IPO. There are two allocation statuses:

• Allotted

Investors who order IPO shares will receive the shares they ordered. For example, if an investor orders 50 lots of IPO shares, they will receive 50 lots of shares in full. This usually happens because demand for the IPO shares is low or undersubscribed.

• Allotted with Scale Back

In this allotment, investors who order IPO shares will receive fewer shares than they ordered. For example, when an investor orders 50 lots of IPO shares, but the investor only receives an allotment of 10 lots. This happens because the demand for these shares is too high or oversubscribed.

   4. Distribution

In the fourth stage, the company begins distributing IPO shares according to the number allocated by the company.

   5. Listing Day

Entering the final stage, the listing day is the day when the issuer’s shares are listed on the exchange so that investors can buy and sell their shares on the capital market.

Writer: Riska Novi Cahyani

Editor: Salsabila Wardhani & Yundira Putri Rahmadianti