Business corporate of large sizes – airlines, shipping lines, heavy industries and mining etc. need huge capital towards formation and successful running. Governments the world over have a tendency to nationalize a majority of these businesses, keeping in mind the welfare and up gradation of the standard of living of their citizens.
Apart from these Public Sector Undertakings, there are a number of private sector corporate companies to cover up the gap in manufacture, trade and commerce to fulfill the need of the people nationally and internationally. Joint ventures between the Public and Private sector and also between Corporate Companies of two or more nations are very common in the economic field.
All these ventures need capital outlays of immense sizes, running into trillions of appropriate currencies. Leaving alone the small fraction of individual ownerships, a vast majority of these corporate ventures are dependent upon contribution of money from the public at large. Mobilization of such enormous sizes of capital input is facilitated only by issue of shares, stocks and securities to be participated by public investment. The share market business of every country carried out in the trading floors of Stock Exchanges is the back bone of capital mobilization for corporate ventures of high magnitude.
Rules and regulations of corporate formations are being enacted by the Governments to regulate the trade practices, as also a fair and equitable distribution of wealth with no rooms for malpractices. Company Laws of every nation stipulate that, of course with minor differences here and there according to the age old customs and practices, mobilization of public money towards the objective of corporate formation should be done only in accordance with the procedures. The first step for the formation of a business corporate is registration with the authorities by submission, of the Memorandum and Articles of Association describing in detail the share capital and its proposed mobilization methods, apart from other particulars. The registered companies are allowed to issue shares for public subscription after listing them in the respective Stock Exchanges.
These Initial Public Offers (IPO) are being scrutinized by the public with relevance to the strengths and weaknesses of the proposed venture. It is here the Share Market dealings play a vital role in the evaluation of the issue. Such of those corporate companies that have already established goodwill among the public opinion through their performance in earlier years, find it very easy to get their shares oversubscribed than the anticipated quantum. Observers and economists watching the emerging stock market movements guide the investors in this regard.
Secondly Corporate business houses whose shares are performing well in emerging stock markets over the years can capitalize their goodwill into mobilization of huge sums of money by securities, debentures and bonds of public debt for their expansion and diversification activities.
Thirdly, based upon the performance of the shares of companies in the same sectors, like steel, cement, building materials, consumer products and other heavy industries like ship building, mining, airways etc. in the emerging stock markets, new ventures in these sectors also get benefited in easy mobilization of capital from the public. Thus emerging stock markets and movements of share prices in “bullish” or “bearish” trends have a strong bearing on healthy corporate financing in all European, Asian and Southeast Asian countries.
CL King & Associates provides investment banking, equity research, sales and trading, and investor services to corporations and institutions. We co-manage bond offerings, IPOs, follow-ons, secondaries, convertibles, and preferred. In addition, we transact directly in the capital markets on behalf of corporations through our Corporate Services business focused on share repurchase and continuous share offerings (“ATMs”).