Pre-IPO (preliminary public offering) is a stage at which private companies raise investment before entering the stock exchange. This round allows the company to offer a limited number of shares or stakes to a limited number of investors, receiving the financing necessary for further growth, improving financial performance or preparing for an IPO. Pre-IPO plays a key role in forming the company's capitalization, as well as increasing its investment attractiveness and helping to minimize risks before entering the open market.
Why do companies need a pre-IPO?
Raising capital at the pre-IPO stage provides a number of significant advantages for businesses:
Raising capital for development. The funds received at the pre-IPO can be used to expand the business, finance marketing campaigns, develop new products or acquire other companies. This allows you to accelerate growth and improve the company's position in the market. In a highly competitive environment, a company needs to use all available resources to strengthen its competitive advantages, and a pre-IPO becomes an excellent tool for this purpose.
Increasing transparency and improving corporate governance. Companies preparing for an IPO must review and improve internal business processes, as well as bring financial reporting into line with international standards. This not only prepares the company for a public offering, but also strengthens investor confidence at the pre-IPO stage, since a transparent management structure and reliable financial indicators indicate the stability of the business.
Formation of a community of loyal investors. Participation in a pre-IPO gives investors the opportunity to purchase company shares at a price lower than that set at the IPO stage. This creates incentives for long-term investment and forms a group of loyal shareholders who are ready to support the company after it goes public.
How do companies prepare for a pre-IPO in Russia?
In Russia, the process of preparing for a pre-IPO has its own characteristics related to national legislation, the economic environment and specific requirements of the stock market. The main steps that companies take to successfully conduct a pre-IPO include:
Financial audit and valuation of the company. At this stage, it is necessary to prepare up-to-date financial statements and conduct an independent valuation of the company. This will help investors understand its current financial stability and growth potential. Conducting an audit and a detailed financial valuation reveal weaknesses that can be eliminated before raising capital.
Improving corporate governance and implementing best practices. Companies strengthen the management structure, create supervisory boards with independent directors and implement mechanisms to control the quality of business processes. This helps to minimize risks and create conditions for a successful placement of shares on the stock exchange.
Legal preparation and compliance with legal requirements. In Russia, this includes bringing the constituent documents into compliance with the requirements of the Moscow Exchange, preparing for the registration of the prospectus, and compliance with corporate legislation. It is important to consider all legal aspects to avoid delays or refusals of registration.
Determining the value of the company and the terms of raising capital. The value of the company at the pre-IPO stage plays a key role, as it determines the terms of participation for investors. The correct choice of valuation method, for example, comparative analysis with other companies in the industry, allows you to set a fair price that will be attractive to potential investors.
Marketing campaign and attracting attention to the company. An important stage of preparation is the active promotion of the company among potential investors. This may include publications in business publications, holding conferences and presentations, creating media materials and native advertising.
pre-IPO Open Oil Market
Open Oil Market, a Skolkovo resident and one of the leading players in the Russian market, is conducting a pre-IPO round before entering the stock exchange. Open Oil Market is developing a B2B marketplace for wholesale supplies of petroleum products, creating a transparent and convenient platform for connecting suppliers and buyers of fuel.
In preparation for the pre-IPO, the company improved corporate governance, strengthened the control structure and brought financial reporting in line with international standards. Investors, B2B marketplace is a promising business that seeks to change the oil products market in Russia.
Features of pre-IPO in Russia
Pre-IPO in Russia is associated with a number of specific conditions, including increased requirements for disclosure of information, the need to take into account sanctions restrictions and the influence of macroeconomic factors. Unlike developed markets, Russian companies often face instability in the stock market, as well as higher risks associated with the political and economic situation.
Nevertheless, successful examples of pre-IPO in Russia show that even in a difficult market, companies can attract significant funds for development. It is important to take into account market features, correctly assess the company's potential and involve experienced consultants and investment banks in the process, which will help optimize the placement process.
Pre-IPO is an important stage on the way to a public offering of shares. For companies, this is an opportunity to attract capital for growth and strengthening their positions in the market, and for investors, a chance to become shareholders of a promising business on favorable terms. In the conditions of the Russian market, pre-IPO requires careful preparation, financial audit, improved corporate governance and compliance with all legal requirements.
The Open Oil Market company is actively preparing to enter the stock exchange. Details about the pre-IPO can be found on our landing page or the official website. A startup that is changing the rules of the game on the Russian oil products market!
