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Despite Low Priced IPO, Square Inc. Still Took Many By Surprise

 

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Finally, after long talks for months, SQUARE INC (NYSE:SQ) the San Francisco based payments and financial services company, went public on  Wednesday, 18th November 2015 and it definitely took many by surprise!

Square Inc. sold shares in it’s initial public offering for $9 per share, giving the company a market capitalization of $2.9 billion, a far below the $6 billion valuation it had earned from private investors. (More on the funding round)

Square and a selling stakeholder (who?) offloaded 27 million shares –  25,650,000 shares of the Company’s  Class A common stock and the selling stockholder as named in prospectus 1,350,000 shares of  the company’s Class A common stock. The company raised $243 million in the process.

That however, was not the initial plan! So what happened? It was estimated that the initial public offering price per share of  the company’s Class A common stock would be be between $11.00 and $13.00. Nevertheless, the stock price went up  as high as $14.78 once ordinary investors could buy the shares on the open market on Thursday. After trading over 47 million shares, the stock finally ended the day at $13.07, which was an a approximate over 45% gain! In a Interview with CNBC, Jack Dorsey, the CEO of both Square Inc and Twitter Inc, showed optmism and added it was not just about  the company’s trading stock but about growing the business.

There is no denying that, many who were doubtful because of the recent market conditions for IPOs. This was quite unusual for many investors and  among experts like professor Jay R. Ritter, of  University of Florida  who has been tracking IPOs for years. ( Jay R. Ritter also writes  about investing, with a focus on initial public offerings on Forbes)  For others, this was supposed to be a sign of doom!

So, what might the returns for the investors who got in early look like?  According to Business Insider, investors who valued the company at $6 billion last year also got an absolute deal! However, according to Bloomberg View, for a certain group investors, it was indeed a loss! And for others who had negotiated for themselves a “ratchet,” the game was fair as it had been agreed!

China Cracked down $64 Billion ‘Underground Banking’ Money Laundering Activities And Illegal Transfers

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Currently, china is boosting efforts to fight corruption and to curb capital out flow. From the news, Chinese officials are said to have cracked down the country’s biggest-ever underground bank which handled illegal foreign exchange transactions worth 410 billion yuan ($64 billion) –report  by People’s Daily

According to Bloomberg, so far more than 370 people have been arrested and other are facing lawsuits and criminal charges. The Chinese authorities started the operation of raiding underground banks in April. Since then, over 170 cases underground banking and money laundering activities and illegal transfers  totaling more than 800 billion yuan ($125.34 billion) have been uncovered. So far . Police have shut down 37 banks. More than 300o bank accounts a´have been frozen. (Source-RT)

The Genesis?  The case was traced to one leader of the Zhejiang network was a man named Zhao Mouyi, who transferred over 100 billion yuan overseas using 850 different bank accounts and a dozen Hong Kong front companies. It is reported that police took nearly a year to sort through over 1.3 million suspicious transactions. (Source-Star Tribune)

Apparently, the Chinese citizens are officially limited to converting $50,000 of yuan per year! So how do the Chinese send billions abroad  for activities such as buying homes? Get the details on China’s Money Exodus here