IPO research
Reading an IPO prospectus in context
Read the business, financial statements, ownership and offering terms as one connected investment case.
01Identify the actual issuer
Start with the legal issuer, operating subsidiaries and sources of revenue. A familiar brand may not own every asset associated with it. Map who contracts with customers, delivers the product, collects cash and bears obligations. Acquisitions and restructurings can change the reporting perimeter, so separate acquired growth from organic growth. Choose questions that fit the business: utilisation for manufacturing, renewals for software and commissioning for energy assets.
02Reconstruct revenue
Establish why customers buy, whether spending is essential and how prices are set. Read concentration alongside contract length, renewal terms, substitution and payment conditions. A famous customer does not remove commercial risk. Product, regional and customer disclosures may overlap; do not add incompatible breakdowns. Distinguish price, volume, mix and deliberate exits when interpreting growth or decline.
03Connect profit with cash
Reconcile revenue and earnings with operating cash flow, receivables, contract assets and inventory. Timing differences require explanation, not automatic approval or rejection. Review receivable ageing, subsequent collection and impairment assumptions. Keep statutory and adjusted earnings side by side. Share-based compensation and other excluded items can still have economic consequences; record which adjustments are justified and why.
04Follow ownership and proceeds
Different shareholders may have different costs, rights and exit arrangements. Review control, voting rights, related parties and employee incentives. Separate newly issued shares from secondary sales and trace who receives the proceeds. Expansion, research, working capital and debt repayment require different tests. Specific use-of-proceeds milestones create a basis for later review; a prestigious investor is not a substitute for that work.
05Make risk analytically useful
Link each material risk to a disclosure and a transmission mechanism. Supplier dependence may affect production, customer delivery and cash collection. Separate operating, financial, governance and trading risks, then consider both likelihood and severity. Contractual protections and cash buffers can mitigate some exposures but not every outcome. Leave unresolved questions visible rather than turning them into optimistic model inputs.
06Compare genuinely comparable businesses
Peer selection should reflect revenue quality, maturity, accounting and reinvestment needs, not only industry labels. Use ranges and internally consistent scenarios. Faster growth bought through lower prices cannot automatically coexist with unchanged margins. Offering price does not prove intrinsic value: ask what operating assumptions it embeds and which evidence would support or challenge them.
07Separate research from the trade
Long-term business quality and offering-stage trading conditions are separate questions. Subscription demand does not guarantee allocation or a positive listing return. Where financing is involved, consider interest, fees, cash occupation and partial allocation. Verify applicable offering documents and intermediary arrangements. Choosing to wait can be consistent with a positive long-term research interest; this discussion is not a personal trading instruction.
08Cross-read a customer change
A larger major-customer share needs pricing, payment and dedicated-capacity analysis. Standard equipment and reusable products differ from specialised investment. Feed the findings into growth, cash and substitution assumptions rather than treating concentration as automatically good or bad.
09Keep a reviewable conclusion
Record established facts, key assumptions, unanswered questions and monitoring indicators. Link facts to reporting periods and source sections. Revisit growth quality as well as headline outcomes: collection, investment needs and customer retention can change the interpretation. SilverCape's interests span stocks, IPOs, AI, data development and new energy; the discipline remains to understand the business, test the evidence and then evaluate price and risk.
