More online digital marketing events about IPO will happen

Believe it or not. Online digital marketing is changing the conventional world significantly, sometimes in a disruptive way. 

Here is a piece of recent news which draws my attention. 

Harvest Fund Management Co.Ltd, one of China’s largest asset managers, plans to launch a fund focused on giving Chinese investors access to shares in Alibaba Group Holding Ltd.’s initial public offering on the NYSE. 

The fund will give mainland Chinese a new route to investing in overseas stocks, rather than just through a current quota system allotted to fund managers called the Qualified Domestic Institutional Investor Program, a senior Harvest official said. The fund is expected to raise more than $100 million, a person familiar with the matter said.

Alibaba’s initial public offering, pushing beyond $20 billion, is expected to be one of the largest in history. The offering is being planned for the first half of August, although timing isn’t set in stone. Given the size, getting fund managers who haven’t yet invested in Chinese stocks is likely the biggest challenge for the Internet giant’s underwriters. A recent survey by ConvergEx Group showed that optimism about Alibaba’s business model and potential performance as a publicly traded stock didn’t necessarily translate into plans to buy into the company.

It reminds me of  the business model called “online investing in IPOs”. In the past, IPOs were exclusive, available mostly to institutions and their largest investors. It simply was not possible for the vast majority of people to get access to, or afford to, participate in IPOs. IPO companies were limited to a narrower base of investors, and the number of funded IPOs has declined over the past decade. That is how most investment banks make huge amount of money by monopolizing all these financial resources over the past decades. 

As we all know, IPO business sometimes is all about how managements are marketing their company, so as to create investing demand among potential investors. From the company’s perspective, it doesn’t really matter how they get their investors, either from the wholesale, or from the retail. On the contrary, it does matter how to get more highly-committed investors who firmly believe in the prospect of the company in a longer term. 

Some technology companies, which smells the potential opportunities, have already started the IPO retailing business by establishing online platforms. 

The online platform, designed to open up IPO access to large numbers of participants, allows more people than ever to join the bidding, at the same price and time as those big guys. IPO company will benefit as the online platform can uniquely scale millions of users per IPO, creating a large new source of capital. Meanwhile, it helps to improve the financial market to be more equal and fair. 

I won’t be surprised to see there would more online digital marketing events about new IPO launch in the future.