Re: Questions about an IPO and subsequent Market Cap

Posted by Andy F. on January 22, 2008, 8:36 am

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>I was looking into a random IPO recently. The company that I was

> reading about was VIT. Their market cap (MC) today is ~$218M.

> According to http://www.tradingmarkets.com/.site/news/Stock%20News/907091/

> ,

> their successful IPO raised $65M.

> According to

http://www.streetinsider.com/IPOs/VanceInfo+Technologies+(VIT)+Sees+IPO+Price+of+$7.50-$9.50/3161843.html

> their IPO price was $8.50/share, and they sold 7.65M shares.

> Therefore, they raised exactly $65,025,000 worth. This occured on

> December 14th, 2007, which was about one month ago.

> However, today, the MC of this company is ~$218M, and the share prices

> are *LESS* than they were during the IPO. They price at $6.07/share

> now.

> Moreover, on their IPO, there were 7.65M shares, but today, according

> to http://finance.google.com/finance?q=vit , there are 36.05M

> shares.

> Here are my questions:

> 1. Since they didn't have any secondary offerings, it really seems

> that they released 36.05M shares during their IPO(?). How do these

> analysts figure out that they raised $65M and not $306.4M (36.05M *

> $8.50/share) ?

> 2. Why is there such a HUGE discrepancy between 36.05M shares (which

> is what they have today) and 7.65M shares (which is how much they sold

> at IPO)?

I would guess that there were 28.4M privately owned shares before the IPO.