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Underpricing in the context of an ipo

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Reference no: EM132614017

In October 2013, Royal Mail shares were floated through an Initial Public Offering (IPO). In May 2011, Glencore was part-floated through an IPO. Both companies' shares were listed on the London Stock Exchange.

(a) Explain what is meant by underpricing in the context of an IPO and critically assess whether or not the two companies' shares were under-priced when their IPOs happened.

(b) Discuss why companies need to provide clarity and transparency to potential investors during an IPO. Discuss the governance issues surrounding Glencore at the time of its IPO, which caused difficulty with clarity and transparency.

Reference no: EM132614017

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