Question

How would you find the

• Net Amount Raised
• Expected Shareholder return through EPS

Of an IPO:

Additional information:

Price of $9 per share

P/E = 10x

Wants to raise $50m would mean issue of around 6m new shares

IPO process fees at 10.25%

Answer 1

Calculation of net amount raised from IPO
Net amount raised= Sale proceeds from IPO-Process cost of IPO
Sale proceeds from IPO= $9 per share*6 million shares
		$ 54 millions
Process cost of IPO= $ 54 millions*10.25%
		$ 5.535 millions
Net amount raised= $(54-5.535)millions
		$48.465 millions
Calculation of EPS
We know,
P/E= Price per share/Earning per share
Earning per share= Price per share/P/E multiple
		$9/10
		$0.90