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The costs of raising equity capital by Australian property trust initial public offerings

Dimovski, William 2006, The costs of raising equity capital by Australian property trust initial public offerings, Pacific rim property research journal, vol. 12, no. 2, pp. 162-177.

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Title The costs of raising equity capital by Australian property trust initial public offerings
Author(s) Dimovski, William
Journal name Pacific rim property research journal
Volume number 12
Issue number 2
Start page 162
End page 177
Publisher University of Technology, Sydney
Place of publication Sydney, N.S.W.
Publication date 2006
ISSN 1444-5921
Keyword(s) IPOs
Underpricing
Property trusts
Issuing costs
Summary This paper reports some of the direct costs of raising equity capital by property trust initial public offerings (IPOs) in Australia from 1994 to 2004. It also documents the amount of underpricing by these IPOs. The results indicate the average fees paid to underwriters and/or stockbrokers in managing and marketing the issue was around 3.3% of the public equity capital raised. The average fees paid to legal firms, accounting firms and valuers for their professional involvement and expert reports were 0.4%, 0.2% and 0.1% respectively, totaling 0.7% of the equity raised. Other fees such as printing, listing fees, postage, distribution and advertising cost around 2.1%. The total average direct costs amounted to around 6.1% of the proceeds raised. The average underpricing by these property trust IPOs was 2.6%. This paper also investigates the hypotheses that the percentage direct capital raising costs are influenced by the size of the IPO and whether the IPO is underwritten. This study confirms that larger property trust equity capital raisings have lower percentage total direct cost;, however, it does not find that underwriting significantly influences the percentage of total direct costs for these property trust IPOs.
Notes Reproduced with the kind permission of the copyright owner
Language eng
Field of Research 150201 Finance
HERDC Research category C1 Refereed article in a scholarly journal
Copyright notice ©2006, University of Technology, Sydney
Persistent URL http://hdl.handle.net/10536/DRO/DU:30003528

Document type: Journal Article
Collections: School of Accounting, Economics and Finance
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