Technical question - bonds v equity

[Paralegal178]

Hi all

Had a technical question relating to a private company issuing public debt (i.e. bonds). Can a private company become a public company via a bond issuance instead of an IPO?

I don’t think a private company can issue bonds to the public whilst remaining a private company so I’m just wondering whether they’d need to become public via the stock market first!

Hope that makes sense and thanks in advance!

 

[J Wu]

Hi all

Had a technical question relating to a private company issuing public debt (i.e. bonds). Can a private company become a public company via a bond issuance instead of an IPO?

I don’t think a private company can issue bonds to the public whilst remaining a private company so I’m just wondering whether they’d need to become public via the stock market first!

Hope that makes sense and thanks in advance!

The key distinction between public and private companies refers to whether the shares can be traded. Private companies can still issue bonds while remaining private. For example, WeWork aborted their IPO earlier this year but had a bond issuance in 2018.

 

[Frank]

Hi all

Had a technical question relating to a private company issuing public debt (i.e. bonds). Can a private company become a public company via a bond issuance instead of an IPO?

I don’t think a private company can issue bonds to the public whilst remaining a private company so I’m just wondering whether they’d need to become public via the stock market first!

Hope that makes sense and thanks in advance!

A. Bonds and IPO

Via bonds you get money, so you cannot become public by using them.

A company becomes public after issuing an IPO, i.e. people are buying shares in your company --> hence it becomes public bcos they own shares in it.

B. Can private companies issue bonds?

Yes, private companies can issue bonds.

C. Are private bonds issued only on the SE?

Nope, not necessarily.


https://www.investopedia.com/ask/answers/what-does-going-public-mean/
https://opentextbc.ca/principlesofeconomics/chapter/17-1-how-businesses-raise-financial-capital/

 

[Paralegal178]

Thank you both, that makes things a lot clearer!