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Comparison of Panama IPO Market to Us Market
is a meeting place between two main characters in an economy: companies and saving depositors.
The BVP fulfills an essential function in the growth of an economy, since it flows savings towards productive investment. It is a financing instrument for enterprises and of an investments one for saving depositors.
In our country, the goal and objective of the BVP is to gather securities trading companies registered in it in order to perform trading of several classes of securities. Its function is to manage and regulate this process and to receive a commission that will vary depending on the type of instrument traded in its value.
The BVP must watch over the promotion and exchange of securities, both public and private, and that transactions are performed in accordance not only to the Law, but also to strict standards of commercial and professional ethics. It must also provide and maintain, available for the public, financial and commercial information about the enterprises registered in it.
We consider pointing out that the fact that an enterprise is registered in the BVP, does not guarantee that investing in it is secure. The BVP’s responsibility is limited to watch for the existence of a liquid and transparent market for securities quoting. Investors, aware of the inherent risks, are responsible for their decision of buying or selling a share of stock.
10. Comparison between the IPO markets of Panama and the US
In this section we’ll take a gross overview of the similarities and differences of IPO markets in Panama and the United States. These similarities and differences will help us to understand both markets and give us a better perspective of what to expect from these markets in terms of opportunities.
10.1 Similarities
The main reason as to why companies in both markets, Panama and the US, decide to go public is the need to obtain capital. This need to obtain capital in both markets originates from the same reasons, that is, to increase its assets quickly and to expand and to pay debts.
A similarity between both markets is that they are regulated by an entity in charge of regulating, analyzing and watching over the sales of securities to the investing public. In Panama, that entity is the National Securities Commission, while the Securities and Exchange Commission holds those tasks in the United States. Both commissions have the power to create secure environments for investors.
Another similarity between both IPO’s markets is that carrying out that initial shares sales operation is costly, complex and requires too much human effort and capital. In both markets these costs may represent between 15 and 25% of the capital collected by the initial public offering of these securities.
Both IPO regulatory entities demand a heap of information that must be filed to them. They also demand that part of this information must be presented to investors and to the possible investors in a document called prospectus at both markets. The [next page]