Understand the evolving Initial Public Offerings market with AIF’s new IPO course

Prof Paolo Fulghieri teaches participants how to take advantage of opportunities as buyers or sellers.

According to Prof Paolo Fulghieri, the international market for IPOs is cyclical, ebbing and waning depending on market trends and investor risk appetite. Paolo says the market has evolved quite dramatically in the last several years, and he will address these changes in his course on IPOs to be delivered at the Amsterdam Institute of Finance from 27 to 29 June 2022.

Paolo is a professor of finance at the Kenan-Flagler Business School of the University of North Carolina in the US, and actively conducts research in corporate finance and its interactions with investment and commercial banking. His work has been published in leading finance journals, including Journal of Finance, Review of Financial Studies, Journal of Financial Economics, and Journal of Banking and Finance.

He holds a dottore in discipline economiche e sociali from Università Commerciale “Luigi Bocconi” and has taught corporate finance and the economics of information at the Graduate School of Business of Columbia University, financial management at the JL Kellogg Graduate School of Management of Northwestern University, and corporate finance in the MBA and several executive education programmes at INSEAD, France, where he was dean of the PhD programme. He has also taught corporation finance at the Graduate School of Business of the University of Chicago and in several executive education programmes, as well as a course on foundations of finance at AIF.

“I have been a student of how the public equity market has changed over the last 30 years, and my IPO course has been developed on the recognition that this is an important market to foster innovation and create wealth in communities,” he says.

Understanding the changing IPO climate
Paolo says IPOs are on the rise across the USA and Europe, as well as other parts of the world. “On the supply side, this is due to new technologies becoming available, new companies and new ventures,” he says. “It’s an important market for firms because it provides a source of capital for expansion, and because it provides liquidity for investors where shareholders are looking to divest or they’re wanting to find a broader range of potential buyers, which the public equity market can provide.”

He says as a wave of venture capitalists exits businesses, this also contributes to the IPO market coming back. Furthermore, the tech sector has changed, and larger IPOs have become more common (particularly significant is the rising number of “unicorns” – startups valued at $1 billion or more).

Another major development is the more frequent use of Special Purpose Acquisition Companies (SPACs), which are businesses formed specifically to raise capital through an IPO with the intent of acquiring a private company, which in this way will become effectively public. “These transactions are very different to the traditional IPO market and in America they are beginning to dwarf it. We’re now seeing it increasing in Europe too, particularly in certain locations, one of which is Amsterdam,” says Paolo. “It’s a more complex strategy and it’s important for companies and investors to understand how it can be used as a tool.”

Paolo says one of the challenges of the IPO market is that the information available to those on the sell-side and the buy-side is very different and it’s important for all parties to understand how this plays out, and the challenges and opportunities for both firms and investors. “We need to ask, ‘What are the critical features that characterise this market segment that both companies and investors can access?’ and for both to have an understanding of what they’re up against when they work in this segment,” he says. His course aims to provide answers to this question.

“I focus on how to navigate this space,” he says, using the analogy of navigating a river in a boat. “There are rocks in the way, but if you know what to look for, you can avoid them, even the ones under the water, so that you can access the market with confidence.”

Course structure
The programme is based on three days of instruction. The first day is optional, and is devoted to a review of relevant valuation techniques. The second and third day provide an in-depth analysis of the inner workings of the market for IPOs through a blend of lectures, case analysis, and practical exercises.

“Many people operate off a view that is conditional on their own specific experience of it, which may be a bit too narrow,” says Paolo. “It’s important to broaden one’s understanding to have a 360-degree view of how this market works. That’s what the course aims to do – to provide a comprehensive view of different angles of this market that participants may not be fully aware of.

“We academics have done lots of research in this market. The benefit of academic research is that we have access to very large data sets – probably considerably more than private agents on the buy-side, or the sell-side. And we have tools to analyse this data and tease out what the drivers of this market are.”

The programme is aimed at investment banking professionals engaged in IPOs and executives in companies considering an IPO. It will also be useful to equity market investors interested in better understanding risk and opportunities in the market for IPOs, as well as any finance professionals wanting to gain a solid overview of today’s IPO market segment.

For more information, visit the course webpage.