QUESTION 1 Three years ago, you founded an outdoor recreation company called EloMax Inc., a...
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QUESTION 1 Three years ago, you founded an outdoor recreation company called EloMax Inc., a retailer specializing in the sale of equipment and clothing for recreational activities such as camping, skiing, and hiking. So far your company has gone through three funding rounds: Round Series A Series B Series C Date Feb 2016 Aug. 2017 Sept. 2018 Investors You Angels Venture Capital Trust Fund Shares 500,000 1,000,000 2,000,000 Share Price (GHS) 1.00 2.00 3.50 It is now 2019 and you need to raise additional capital to expand your business. You have decided to take your firm public through an Initial Public Offering (IPO). You would like to issue an additional 6.5 million new shares through this IPO. Additionally, as part of the IPO you also decide that the timing was right to cash in on your investment by selling a quarter of your current share-holding in a secondary offering. EDC Securities acting as your lead investment banker has set a price of GHS5.3 for the IPO. If your firm successfully completes its IPO, you forecast that 2019 Earnings per share will be GHS0.75. Required: a. After the Series C round of financing what will be the total value of your equity stake in the business? [2 marks
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