What is Public Offering?

Questions like what is a public offering, what is an IPO calendar, what is a public company are essential questions that new investors must know the answers to. Especially for those considering long-term investments, understanding what a public offering is and following the IPO calendar to learn when public offerings occur can be the first step in discovering great opportunities.

In this article, we will answer the following questions:

• What is a public offering?
• What are the types of public offerings?
• What is the purpose of a public offering?
• How to find out which companies are going public this week?
• What is an IPO calendar?
• How to participate in a public offering?
• How are public offering lot numbers calculated?

What is a Public Offering?

A public offering is when a company offers its shares for sale through public announcement and invitation to be traded on the stock exchange. After this process, the company's shares begin trading on the exchange and any investor can buy and sell shares of that company.

Types of public offerings vary based on timing, method, and price collection approach.

Types of Public Offerings by Timing

Public offerings are divided into two categories based on whether they are being done for the first time: "Initial Public Offering (IPO)" and "Secondary Public Offering (SPO)".

1. Initial Public Offering: When a company goes public for the first time, it's called an "Initial Public Offering" or "IPO". This type of offering is similar to the cryptocurrency market's Initial Coin Offering (ICO) process and offers investors the opportunity to become early investors and purchase shares at the base price.
2. Secondary Public Offering: When companies that are already public and trading on the exchange offer additional shares to the public, it's called a "Secondary Public Offering". The Capital Markets Board (CMB) defines secondary public offering as "the re-offering of shares by organizations that have previously offered their shares to the public."

Types of Public Offerings by Method

Companies can offer their shares to the public through different methods.

1. Capital Increase Public Offering: Capital increase allows companies to create new shares. By offering these shares to the public, the company creates new financing.
2. Sale of Existing Shares: The company's shareholders can offer their existing shares to the public. This allows shareholders to meet their cash needs.
3. Mixed Method Public Offering: A company can also offer its shares through a combination of these two methods. In this case, both newly created shares through capital increase and existing shares from shareholders are offered simultaneously.

Types of Public Offerings by Demand Collection Method

Companies going public are also categorized based on how they determine prices and collect demand before they start trading on the exchange.

1. Price Range Demand Collection: In this method, investors are given a specific price range. Investors submit their demands by choosing a price within this range. Later, based on the received demands, a fixed price is determined within this range and shares are distributed at this price. If there is very high demand and the investor's offered price is too low, they might not receive any shares. However, if an investor bid at the highest price but the determined price is lower, they purchase shares at the determined price.
2. Fixed Price Demand Collection: In this method, there is a fixed price from the beginning rather than a price range. After the public offering price is determined, offers are collected from investors.

What is the Purpose of a Public Offering?

Is there anyone who has opened an investment account and never checked the IPO list at least a few times? Everyone closely follows the IPO calendar and IPO list to learn when the next public offering will be. But why do investors do this - what is the purpose of a public offering?

A public offering gives investors the chance to become shareholders in a company. If the company is going public for the first time, there's an opportunity to buy its shares at the base price.

For companies, public offerings have numerous advantages. Generating cash flow, increasing prestige, and strengthening trust perception are among the main benefits.

Advantages of Public Offerings for Investors

Why do even the smallest investors wonder about companies going public this week, the IPO calendar, or the IPO list? The answer lies in the advantages of public offerings. Here are the benefits for stock market participants:

• Early Investment: Public offering processes give market participants the chance to buy shares of a potentially promising company early and naturally at the base price.
• Low Cost: The cost per share in public offerings is generally quite low. It's possible to participate in public offerings even with a budget under 1,000 TL.
• Equal Distribution: Public offerings generally follow the principle of equal share distribution. This ensures fair share distribution between large and small investors.
• Portfolio Diversification: Public offerings bring shares from companies in various industries to investors and create portfolio diversification opportunities.

Advantages of Public Offerings for Companies

Going public creates many advantages for companies as well. We can list the advantages that public offerings provide to companies as follows:

• Capital Increase: Companies can generate cash flow and increase their capital without borrowing by offering their shares to the public. This provides the company with strong cash flow and financial flexibility.
• Recognition: Going public increases companies' recognition among investors.
• Transparency and Reliability: Going public brings transparency and regular financial reporting obligations to companies. This can increase the company's reliability.
• Liquidity: Through public offering, existing shareholders of the company can generate cash flow by selling some or all of their shares.

How Are Public Offering Lot Numbers Calculated?

The term "lot," meaning "share," is defined in Turkish stock markets as a share equivalent to 1 TL nominal value. However, the lot concept can correspond to different sizes with different assets. Generally, 1 lot equals 100 shares.

Public offering lot numbers can be calculated differently based on "equal distribution" or "proportional distribution" methods.

Equal Distribution Public Offering

In equal distribution, all investors receive the same amount of shares. For example, if there are 100 million shares and 1 million demands, each person gets 100 shares (100,000,000/1,000,000). If 1 lot consists of 100 shares, this means 1 lot per person.

Proportional Distribution Public Offering

In proportional distribution, investors receive lots based on the size of their purchase order. Proportional distribution is calculated as follows:

1. Total demand amount / Number of shares offered = Demand multiple
2. 1 / Demand multiple = Offering ratio
3. Requested share amount x Offering ratio = Shares allocated to investor
4. Share amount / 100 = Number of lots

What is an IPO Calendar?

An IPO calendar is a schedule containing the timing of public offering processes. Information such as which companies are going public this week or demand collection periods can be learned from IPO calendars.

The IPO list serves a similar function. IPO lists show companies that will go public during a specific period.

Are There Public Offerings in Cryptocurrencies?

People often wonder whether there are public offerings in the cryptocurrency market, that is, whether tokens are publicly offered. While cryptocurrencies don't have public offerings per se, they have Initial Coin Offering (ICO) processes similar to initial public offerings. In this process, a coin or token is offered for presale before being listed on cryptocurrency exchanges. This allows cryptocurrency investors to become early investors in a potentially promising project while the project creates new financing.