Initial Public Offering - History

History

The earliest form of a company which issued public shares was the publicani during the Roman Republic. Like modern joint-stock companies, the publicani were legal bodies independent of their members whose ownership was divided into shares, or partes. There is evidence that these shares were sold to public investors and traded in a type of over-the-counter market in the Forum, near the Temple of Castor and Pollux. The shares fluctuated in value, encouraging the activity of speculators, or quaestors. No evidence remains of the prices for which partes were sold, the nature of initial public offerings, or a description of stock market behavior. Publicanis lost favor with the fall of the Republic and the rise of the Empire.

In March 1602 the “Vereenigde Oost-Indische Compagnie (VOC), or Dutch East India Company was formed. The VOC was the first modern company to issue public shares, and it is this issuance, at the beginning of the 16th century, that is considered the first modern IPO. The company had an original paid-up share capital of 6,424,588 guilders. The ability to raise this large sum is attributable to the decision taken by the owners to open up access to share ownership to a wide public. Everyone living in the United Provinces had an opportunity to participate in the Company. Each share was worth 3000 guilders (roughly equivalent to US$1,500). All the shares were tradable, and the shareholders received receipts for the purchase. A share certificate documenting payment and ownership such as we know today was not issued but ownership was instead entered in the company’s share register.

In the United States, the first IPO was the public offering of Bank of North America.