Flotations, in the context of finance and business, refer to the process through which a company offers its shares to the public, enabling them to be bought and traded on a stock exchange. It is commonly known as an initial public offering (IPO). Flotation represents the act of taking a privately-owned company and making it publicly available for investment.
During a flotation, a company appoints financial institutions, such as investment banks, to act as advisers and facilitate the process. These institutions assist in determining the company's value, preparing the necessary documentation (e.g., prospectus), coordinating marketing efforts, and managing the allocation of shares to potential investors. The company may also rely on legal and accounting firms to ensure compliance with relevant regulations and provide expert advice.
The main objective of a flotation is to raise capital for the company, allowing it to fund its expansion, repay debts, or fuel further growth. By going public, a company gains access to a wider pool of investors and the ability to issue sought-after liquid shares. Moreover, it enhances its public image, credibility, and brand visibility, which can be beneficial for attracting customers, partners, and suppliers.
Flotations involve a complex and meticulous process, requiring careful planning, due diligence, and regulatory compliance. Various factors, such as market conditions, industry performance, and investor sentiment, can influence the success of a flotation. Nowadays, flotations have become more streamlined and can be conducted either through traditional stock exchanges or emerging technology-driven platforms.
