Friday, May 18, 2012, was a big day for American tech giant Facebook. The social media behemoth made its initial public offering (IPO) -- its debut as a publicly traded company -- on the New York Stock Exchange that day. In just one day of trading, Facebook sold 421.2 million shares of itself to investors for $38 apiece, amassing a cool $16 billion in new capital just about instantly [source: Bel Bruno]. Facebook's IPO became the largest tech offering – and third largest overall -- in U.S. history.
In the parlance of global IPO history, however, this is peanuts.
Initial public offerings are as high as high finance gets. When a well-known, formerly private company goes public, investors clamor for shares. They already know the company's management, they know its earning history, its forecasts. In many cases, the only thing left to chance is how much higher the share price will go once trading begins.
They're also the result of months or years of work. Companies turn to investment banks to underwrite the offerings, vet buyers, scintillate the media and value the stock. When it goes right, an IPO can mean a sudden infusion of cash in the tens of billions in just a matter of hours for some companies.
What follows are 10 of the most successful IPOs (by one-day proceeds) in the history of the world.
AT&T Wireless, the mobile division of American telecommunications monolith AT&T, just barely squeaked in its IPO before the dot-com bubble burst. The stock market began to slide in mid-March 2000, and AT&T Wireless released its initial public offering on April 26. Other tech companies withdrew their IPOs, but AT&T gambled and went ahead with its offering. It paid off.
The wireless division's affiliation with its well-known parent certainly didn't hurt its prospects. When trading began on the NYSE, AT&T Wireless released 360 million shares. Investors fell in step with underwriters' valuation of the stock, with shares opening at $30.12 and closing at $31.75; its pre-offer value was $29.50 [source: Portnoy and Jastrow].
By the time the bell rung to close the day on the exchange, AT&T Wireless had raked in $10.62 billion in new capital [source: BusinessWeek]. It set the record for the largest IPO in American history, a title the company would hold for six years.
Always one to buck the global trend, Russia did it again when it took OAO Rosneft -- the state-owned oil company -- public. While many other large IPOs were the result of the privatization of a state-owned entity, OAO Rosneft was Russia's share sale of its own company. What's more, Russia had put the oil giant together through seized assets from private enterprises operating in the country.
A number of financiers balked at the IPO, considering it unethical. This didn't stop Russia from offering the stock -- and other investors on the Moscow and London exchanges from buying it. When OAO Rosneft went public on July 13, 2006, it attracted $10.65 billion in capital, with shares underwritten by bankers like JPMorgan and Morgan Stanley [source: BusninessWeek].
OAO Rosneft released 1.38 billion shares of itself, valued at $7.55 apiece [source: Bloomberg]. The IPO fell about $1 billion short of the company's hope to raise $11.6 billion.
The Bank of China (BOC) was a state-owned bank until it was spun off into a publicly traded private lender during its IPO on May 23, 2006. The one-day total for purchases for shares ahead of the listing on the Hong Kong exchange the following week -- attracting everyone from the bank's everyday account holders to European banks like Royal Bank of Scotland -- topped $9.7 billion [source: Lague]. When the final tallies were in, the BOC raked in a whopping $11.1 billion during its IPO [source: BusinessWeek].
The bank issued 25.57 billion shares, comprising just 10.5 percent of the BOC, at the equivalent of about 38 cents apiece [source: Lague]. The shares sold rapidly, despite reports of 75 cases of fraud and corruption among the bank's leaders the year before. All told, Bank of China's IPO was the biggest offering in six years.
When German telecommunications giant Deutsche Telekom AG issued its IPO on Nov. 17, 1996, it was the largest in European history. The company that spawned T-Mobile released more than 713 million shares of itself. By the end of the day, Deutsche Telekom had raised $12.48 billion [source: BusinessWeek].
Trading on the European exchange began on Nov. 17, 1996, and raised the value of the stock to $22.45. Investors who bought the stock as trading began and sold it an hour later made a 19 percent profit for their trouble [source: Ascarelli].
Trading of what came to be one of the hottest telecom stocks in Europe at the beginning of the dot-com bubble was heavy. It was so heavy, in fact, that the European exchange extended their daily trading hours until 7 p.m. for a full week following Deutsche Telekom's IPO [source: Ascarelli].
When do the taxpayers benefit from an IPO? When a company that owes its life to a federal bailout goes public in a big way.
In December 2008, President George W. Bush threw a $50 billion lifeline to General Motors, which had been struggling (along with other American automakers) in the wake of the global economic downturn that started in 2007. Unfortunately, that assistance didn't do much to keep GM from filing for Chapter 11 bankruptcy in June 2009. As part of the company restructuring that usually follows a Chapter 11 filing, the U.S. Treasury Department agreed to loan the company another $30 billion -- in exchange for a 60-percent stake in the company once it got back on its feet [source: ProPublica]. By the following month, the newly reformed GM was ready to start operations once more.
By the following year, GM was one of the hottest companies on the planet. Investors couldn't wait to buy their way in -- and the company knew it: Less than a week before its November 2010 IPO, the company's shareholders raised the estimated share price from between $26 and $29 per share to between $32 and $33 a share [source: Isidore]. When GM finally went public on Nov. 19, 2010, the automaker raised a staggering $15.8 billion, making it the second-largest IPO in U.S. history. That cash infusion helped GM repay nearly half of its initial $50 billion bailout, which resulted in nearly $700 billion in federal revenue [source: ProPublica]. That should make the taxpayers very, very happy.
You may not have heard of Italian energy company Enel SpA, but you may have gotten power from them at some point. The company has a presence in 23 countries in Europe, North and South America and Asia. It's the second largest energy company in Europe and it has a customer base of 60.5 million -- about the population of the entire United Kingdom [sources: Enel SpA, BBC]. The company is also well-known as a pioneer in green energy, with investments in hydroelectric, geothermal, solar, wind and biomass power generation.
It seems that none of this was lost on investors when Enel SpA went public on Nov. 2, 1999. The formerly state-owned company was privatized just ahead of Italy's move to adopt the euro as its currency. Its IPO of 31.7 percent of the publicly traded company (3.8 billion shares) raised $16.58 billion in capital for the firm, representing 10 percent of the value of the Milan-30 blue chip business index [source: BusinessWeek].
Ever since the consortium of banks that issued the first Visa card in 1977 became Visa International, investors chomped at the bit for the privately held American credit card giant to go public. They would have to wait 31 years before they got the chance. When Visa finally went public in March 2008, everyone expected a huge windfall for the company. Everyone was right.
On Tuesday, March 18, 2008, Visa made its initial public offering on the New York Stock Exchange. Despite going public amid the beginning of the global financial crisis, Visa managed to rack up $17.9 billion in capital. By the end of the day, the company's stock traded at $44 a share [source: Benner]. The following day, it traded at $66 [source: Kaufman].
One reason Visa's IPO was so successful was the scrupulousness with which underwriters JPMorgan and Goldman Sachs eyed buyers. The bankers vetted out investors who might have flipped the shares they bought. Quick resales would have harmed the company's capital accumulation, since the market could have become flooded with already-purchased stocks.
Visa's IPO marked the largest in U.S. history at the time, demolishing AT&T's six-year-old record of $10.6 billion.
When NTT Mobile Communications, a giant in Japanese wireless phones, went public on the Nikkei 225 average on Oct. 12, 1998, the Asian market was dull. The offering of stock in the company managed to bring the market back to life, however. Ten days after NTT Mobile's IPO, the Nikkei average had added 1,300 points to its 14,295 total in just a five-day span [source: WSJ]. While other Asian markets were embattled, the IPO kept the Nikkei chugging along.
The initial pre-offering value for shares in the company was 3.9 million yen; by the end of the day, they had risen to a close of 4.65 million yen. By the time the bell had rung to end the day on the Nikkei, NTT Mobile had amassed $18.4 billion in capital -- in one day. It was the largest IPO in world history [source: NYSE].
Not a bad stock to purchase considering just over a decade earlier NTT Mobile's parent company, Nippon Telegraph and Telephone, had managed to raise more than $13 billion during its own IPO in 1986.
The concept of the 2000s being the Chinese century got a shot in the arm on Oct. 20, 2006, when the Industrial and Commercial Bank of China (ICBC) made its public debut on the Hong Kong and Shanghai markets. The company raised the most ever in global history during an IPO, an incredible $19.1 billion [source: BusinessWeek]. That amount is more than the total value of all the shares in existence (called market cap) for the Bank of Ireland. By contrast, the market cap for ICBC was $140 billion, which made it the fifth largest bank in the world [source: Mann].
Rather than introduce a limited number of shares at a high price, the bank created 48.39 billion shares at about 39 cents apiece. Demand for futures contracts (agreements to buy or sell stock at a later date) for the shares topped $500 billion, which would have made it twice as valuable as Citigroup, the largest bank in the world at the time [source: Chan].
Investors had good reason to pour their money into ICBC. The bank's retail customer base -- everyday people who hold accounts and investments in ICBC -- at the time of its IPO was 153 million, or 10 million more people than the entire population of Russia [source: Chan].
The massive IPOs for two of China's biggest banks -- the Bank of China and the Industrial and Commercial Bank of China -- proved that the growth of the Chinese economy was no fluke. But who would've thought that yet another bank offering would trump both?
The Agricultural Bank of China (ABC) started off humbly, founded by Mao Zedong as a resource for rural farmers, but it hit the big time on July 6, 2010, raising $19.2 billion in a single day to become the biggest initial public offering in history. By the end of the day's trading, the once-humble bank was worth about $128 billion – more than Citigroup and Goldman Sachs [source: Wines].
ABC was the last of China's four largest banks (the last being the China Construction Bank) to go public. Although the initial stock offering took a bit of a hit due to concerns about the durability of China's economy and a slew of Chinese bank bailouts, ABC's triumph continued China's hot streak in the IPO world. According to The New York Times, more than one-third of the new IPOs came from Chinese companies -- a significant increase from the quarter that that came from the country the previous year. What does this mean for China? It's still too early to tell, but it's worth noting that both Morgan Stanley and Goldman Sachs have bet big on the Chinese bank [source: Lee].
HowStuffWorks looks at what hedge funds are, who invests in them and why are they so risky.
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