Business, financial and personal finance news

Initial Public Offering (“IPO”) – An Introduction

What does IPO mean? It refers to the process of offering shares of a privately-owned company for sale to the general public. The first time these shares are offered is called IPO. There are various reasons as to why a company wants to go for IPO, where the more common ones as follows:-

1. Fund raising
Many times when a private owned company wants to raise funds, the financial institutions will insist on collaterals and guarantees, and therefore, the amounts of funds to raise will be limited to the size of the collateral. In the case of IPO, the funds that can be raised will be determined by the confidence of investors on the company, with regards to the growth potential, management team, governance etc. In an IPO exercise, the fund raising potential is way beyond the amount that the company can raise via financial institutions.

2. Low funding cost
Comparing to funding raising via financial institutions (debt funding), where the cost of financing is high, and there could be requirements to place collaterals and guarantees for the financing, the company may be able to raise funding at a much cheaper rates, and without collaterals through the IPO exercise.

3. Unlock potential of the company
As a private owned company, the value attached to the company is always limited because there is no equivalent open market price for this company. Therefore, by going for IPO, the company will need to go through a series of financial, operational and legal due diligence by third party professionals to uncover the full potential of the company. Once the value is endorsed by these professionals, the company is able to unlock its value many times over that of the privately owned company.

4. Branding
Being a public listed company has advantages over many private owned company, where they can have access to bigger and more attractive business potentials. Also, financial institutions and business partners will see them are more credible. Therefore, once the company goes through a successful IPO, the company is deemed to be a “big boy” in its industry, and being a brand in its own right.

5. Succession planning
There are cases where the founders of the company intends to pass on the business to their next generation, but probably unsure if the next generation has interest in their business. Therefore, they would bring the company IPO, and have their family members holding shares of the company. This gives flexibility to the family members to decide whether to retain the shareholding and take over the management of the business, or to sell of their shares for funds to invest or start their own business ventures.

This is Part 1 of the 6 part series in “Initial Public Offering” knowledge articles written by KL Management Services. To find out more about IPO and how your company can start looking into it, kindly visit

Bank Accounts for Bad Credit 101

Unemployment, illness, and unexpected tragedies cause many people to be a position of having bad credit. Once your credit rating drops low it, it is hard to bring it back up. There are bank accounts for folks with bad credit that can help you manage your finances while rebuilding your credit. Combining a current basic account with a prepaid credit builder credit card is a great way to get back on track with your credit.

Current Basic Accounts

This type of account is true to its name. It is very basic and doesn’t have many frills. It does offer direct debit and a debit card. Energy companies like direct debit payments and this can save you money on your energy costs. Setting up direct debits to pay all of your bills will help you manage your money better so you can start paying down your debt. Basic accounts do not offer overdraft, cheques, or pay interest. All you need to get a basic account is proof of residence and a proper ID.

Credit Builder Credit Card

This is a card that is designed to help rebuild your credit. The cards have set limits and you must show that you can stay under that amount and faithfully pay your bill each month. Apply for one of these cards only if you feel certain that you will not abuse it and will manage it responsibly. It is important to realize that if you exceed your credit limit or do not make your payments on time, it will be reflected in your credit history. Pay your bill in full every month, and do not make cash withdrawals. The interest rate on these cards is very high. Once you credit ratings improves, request a better rate.

Secured Credit Card

When you apply for a secured card you must deposit cash with the credit card issuer. The amount of cash you deposit is normally the amount your credit limit will be. The money stays with the card issuer as a security deposit in the event you do not make your payments. You must pay your bill each month on whatever amount you use. It is not deducted from your deposit like a prepaid credit card is. All payments and non-payments are reported to the CRAs. Look for a secured card with low fees.

Manage Your Spending

Most people will admit the reason they are looking for a bank account for bad credit is because they are addicted to spending. Do not buy things you cannot afford. Learn t save money until you can afford to buy things. Your bills must always be paid first. Do not cash your check and go shopping first. Pay the rent or mortgage, the energy bill, buy food, and pay other bills. Say no to the latest technology toy, and save any money left after bills for an unexpected expense that may occur later.

Learn To Live Within A Budget

When creating a budget, the first items listed are the things you cannot live without, such as shelter, electricity, gas, food, and then everything else. Most people get into credit problems because they didn’t know how to manage money, and when he the very first credit card was received it was treated like a toy. Purchases were made for things that were not needed, and the bill added up fast. Soon the only payment being made each month was the minimum required amount. Interest starts adding up at that point, and the bill grows larger and larger. Before long the minimum monthly payment has grown and everything is spinning out of control. That same scenario cannot continue if you ever hope to re-establish good credit. The things that you need each month are those things that provide shelter, warmth, and food. The expensive electronic gadgets, tablets, computers, and smart phones can wait for a day when all the bills are paid and there is “extra” money to purchase something you want more than need.

You can repair your credit no matter how badly damaged it is. Special current bank accounts for bad credit, as well as prepaid and secured credit cards are tools to help you with the job of repairing your credit. Use the tools wisely along with some common sense and you will find you are able to restore your credit.

Analyzing the Terms and Conditions for a Mortgages Comparison

When analyzing the terms and conditions for a mortgages comparison, there are always a few factors you’ll want to keep in mind. Many people look at mortgages as a necessary evil on the path to owning their dream home. When confronted with a lengthy “Terms of Service” document before signing on that ever-important dotted line, many people don’t bother to read it. Analyzing the terms and conditions properly before the mortgage goes into effect can be a valuable negotiating tactic. If you want to change or talk about any conditions you may find unsatisfactory or predatory, you need to do so before you put your signature on the piece of paper that will ultimately control your financial future for decades to come.

One type of mortgage that is very popular in the United Kingdom is called an “interest only” mortgage. It operates very differently from traditional mortgages, especially those in use in the United States and other areas. With a traditional mortgage, the borrower is making monthly payments that go towards both the original principal amount borrowed and interest that has accrued since the last payment. Depending on the terms and conditions, interest could be accruing as frequently as once per day. When the borrower submits their payment for the month, a portion goes to reducing the principal while the remainder goes towards interest. If the interest is compounded, it is being added to the principal on a regular basis and itself begins to earn interest with each passing month.

In an “interest only” mortgage, the original principal of the loan agreement is not being repaid for the duration of the term. Instead, the borrower is making minimum monthly payments that go towards an investment account. When the account contains a specified amount of money and reaches maturity, the money is then used to pay off the principal. In the United Kingdom, these terms and conditions are frequently associated with traditional investment plans. These types of arrangements are also commonly referred to as an “investment backed mortgage.” Changes to regulations in the UK have tightened the requirements for these types of agreements in recent years due in large part to the financial crisis across the world that began in 2007 and 2008.

When reviewing the terms and conditions of a mortgage agreement, you will discover three different ways in which the property in question is valued. These are the appraised value, the estimated value and the actual value. A licensed professional obtains the appraised value during a visit to the property. The condition of the home is taken into consideration, as are any code violations and other financial stipulations that may be relevant. The actual value is also referred to as the transactional value and describes the purchase price of the property. The estimated value is often obtained in areas where no appraisal can be performed. It is very similar to the appraised value in that it takes into consideration any repairs that may need to be made to the home as well as other financial burdens the homeowner may have.

Depending on the financial institution and your credit rating, you may be required to purchase mortgage insurance at the time you sign your original agreement. Unlike other types of insurance, mortgage insurance isn’t actually designed to protect the policyholder in the event of an emergency. Instead, it is designed to protect the lender in the event that the borrower may default on the loan. Mortgage insurance is typically added into the monthly payment amount along with interest, closing costs and other elements. It is possible to stop paying mortgage insurance after a period of time by refinancing. The money paid by the insurance policy goes towards paying off the original loan in the event of a default.