It is no secret that the housing and real estate market has been suffering in recent years. From individuals to companies, it seems everyone is on the brink of collapse. With so many people struggling it is hard to believe that anyone in real estate investment could be doing well; however, there are always those few that surprise us and this time its Transglobe. Transglobe REIT recently announced that they will be taking their company public, opening themselves up to individual investors on the Toronto Stock Exchange. They are one of the first real estate companies to do this in several years; however, since their announcement several other companies have followed suit.
There are several reasons why a privately held company would decide to go public. One reason is that it offers more diversification in and to its investors –it radically opens up the pool of people who can invest. When the public invests, the funds go straight to the company, increasing their capital, rather than through a string of investors. This increases the capital within the company as well as the company’s net worth. It also eliminates their need to take on debt and, in fact, decreases their debt-to-equity ratio. Going public offers new and broader opportunities for acquisition as well as employment. With enhanced stock options, company’s can attract and retain top ranking employees that they may not have been able to prior to their coming out.
Increased capital and diversification, new employees, and new opportunities are all things that help a company grow. Without these things a company would remain stagnant and never reach its full potential. By going public, Transglobe REIT showed the investment world that even in hard times you can succeed. We can only assume that they will be leading us strongly into the future.