The possible benefits of private equity include:
1. By injecting high-quality assets and integrating upstream and downstream enterprises, it may bring significant performance growth effects to listed companies.
2. Strategic investors can be introduced, which is beneficial to the long-term development of the company.
Private placement of shares may be bad in the following circumstances: affiliated companies may reduce the holding cost of additional shares by suppressing the stock price, which constitutes a bad situation.
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First, it depends on the way the company issues additional shares.
There are generally two ways to issue stocks, public offering and private offering, among which private offering is also called private offering.
1. The public offering will put some pressure on the stock price. If the stock is issued in a bad environment, it is very bad news.
2. If it is a private placement, the impact on the stock price is relatively small. If there is an example of a relatively strong institutional investor being targeted for additional issuance, it also shows that the institution is more optimistic about this stock, so it can be considered as good news.
Second, it depends on the stock issue price.
1, if the public offering price is greatly discounted, it will attract the attention of market investors and play a positive role in the stock price; If it is a private placement, then too much discount will have a bad influence on the stock price.
2. If the discount of public offering is relatively small and not paid attention by investors, it will definitely have some bad effects on the stock price.
Third, it depends on the company's texture.
If a listed company issues additional shares for financing, but the company has no growth, in this case, the stock price usually falls due to selling pressure. On the contrary, if the company grows well, the stock price will receive more attention and stimulate the stock price to rise.
If listed companies issue additional shares in order to obtain funds to increase the scale of production, or invest in growth projects, it will certainly bring profits to the company. Only in this way can the additional shares be regarded as good news and have a positive impact on the stock price, but this good news will not be reflected in the stock price soon. On the other hand, if the stock issuance is used to invest in uncertain areas unrelated to the current company's main business, or to do equity transactions, it may not bring profits to the company, so it may also have a negative impact on the stock price, leading to a lower stock price.
Therefore, stock issuance is a financing method that listed companies only use when they are short of money. If it is a stock issue, it is necessary to analyze the issue method and the use of funds. At the same time, due to its uncertainty, its impact on the stock price may be polarized. We need careful analysis to determine the impact of stock issuance on the stock price.