Electronic Public Offering (EPO)

An initial public offering, or new issue of shares, in which the process of applying for shares is handled electronically (i.e. online).

There has been an obvious trend towards the use of placings or bought deals over public offerings, meaning relatively fewer IPOs are available to ordinary investors. The Internet may be capable of reversing this trend. In both the US and Europe, there have been several online IPOs in which private investors have full participation rights. Such online IPOs have sometimes been referred to as electronic public offerings (EPOs).

An example of an EPO was Google's flotation in August 2004. The EPO took the form of a Dutch auction, where the investing public entered online the price they were willing to pay and the number of shares they wanted. The lowest successful bid then became the issue price. The IPO raised USD 1.66 billion through the sale of over 19.6 million sales (issue price of USD 85 per share).

Stock placements

A placing is an issue of new stock that does not seek applications directly from the public. Instead, the investment banker or issuing house looks for clients, such as wealthy individuals and financial institutions, who are willing to purchase large numbers of the new shares at a fixed price.

This issuing method is less expensive than a public offering and has less onerous regulatory and documentation requirements (for example, a formal prospectus typically does not have to be issued). A placing also gives a company more discretion to choose its investors, but has a downside in that there is often less liquidity in the shares due to the narrower shareholder base.

Methods of issuing stocks

Following are the methods of issuing stocks:
1. IPO (Initial public offering)
2. EPO (Electronic public offering)
3. Stock placement
4. Backdoor IPO