Initial Public Offering (IPO)

Content also available for tax entities or on our global site.

Learn about Initial Public Offering (IPOs) and how Sharesight handles a new IPO in your portfolio.

Key points handled in this topic:

  1. What is an IPO and what is the process behind it?
  2. When will a newly listed company be available in Sharesight?
  3. How should I record my IPO shares?
  4. Recording shares purchased directly from the issuer (Direct Stock Purchase Plan)
  5. Where can I find some examples of how other clients handled an IPO?

What is an Initial Public Offering (IPO) and what is the process behind it?

An initial public offering, or IPO, is the first sale of stock by a company on a public exchange, also known as a listing. There are several ways in which an investor can participate in an IPO. Retail and self-directed investors use their online or full-service broker, institutional investors may work directly with the investment bank or underwriter, and some investors may work directly with the listing company.

This is important because the type of IPO transaction you make will impact how you record this information in your Sharesight portfolio.

IPO via your broker

In most cases, this is handled just like a standard buy trade, which involves date, price, number of units, and brokerage cost (if applicable). Refer to our section on recording trades either using our automatic or manual methods.

When will a newly listed company (IPO) be available in Sharesight?

It may take up to a week (5 business days) for our data providers to send us information on newly listed companies or companies that transfer from one exchange to another. This is important because even though you may have participated in an IPO, the security may not yet be available to add to your Sharesight portfolio. You may notice that when trying to lookup the security you cannot find it, or if you have your trades automatically sent to Sharesight, it may fail as our system cannot locate the security. Please also keep in mind that we update prices at the close of trading each day.

How should I record my IPO shares?

Your options in this case are to:

  1. Wait a few days to record the trade using the proper security (Sharesight will make all daily prices available going back to the first day of trading)
  2. Create a Custom Investment and then move this to the listed security once it becomes available on Sharesight.

Depending on how you participated in the IPO, record your initial investment by:

  1. Manually recording a buy trade based on your trade confirmation sent from your broker.
  2. Manually recording an opening balance based on information sent from your broker.

Recording shares purchased directly from the issuer (Direct Stock Purchase Plan)

If a company decides to issue their shares directly to investors this is called ‘issuer sponsored’. While this may be advantageous for the investor in terms of buy price and the lack of execution fees, this usually means that the administration process will be manual. For example, you will most likely be mailed information pertaining to number of units purchased, cost base, etc. You can still easily record this information in Sharesight using our manual option, and opt to record a buy trade or use a simple opening balance.

Keywords: Direct Stock Purchase Plan, entitlement issue, entitlement offer, renounceable entitlements, eligible rights, share purchase plans, retail entitlement, retail offer

Last modified on August 19, 2021 UTC

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