IPO vs Rights Issuance

The word “Subscribe” has been coming up a lot these days and so we would like to take this chance to explain the difference between two events you could wish to subscribe to.

“Subscription” occurs before a company goes public on the EGX for the first time (like E-finance), this happens for a period of time before the stock actually becomes tradable on the market. You “subscribe” to an Initial Public Offering (IPO) in order to gain an exclusive chance to own a stock before it becomes tradable on the market.

You can also “subscribe” to a Rights Issuance of a company. Companies on an exchange could choose to provide their existing shareholders a chance to subscribe to additional stocks as a way to increase their capital. Company rights are also tradable on the market for a window in time for other investors to buy and then subscribe if they wished to. However, if you do not subscribe or sell the rights you bought from the market, you could lose that investment.