How much to raise
A&A Air Pty. Ltd. should consider the following factors when deciding whether to raise $75m or $90m through IPO:

Resources
Preparing for an IPO is a lengthy and resource intensive process that requires 12-24 months lead up time (EY, 2013). If A&A decides to raise $75m through the IPO, it would have to go through a similar process for secondary offering. This time and resource should be better invested in developing and implementing the growth strategy.

The direct cost of this IPO is approximately $2.5m in administration fees plus $5.25m underwriter fees for $75m, or $6.3m for $90m. Spending the extra $1m in fees now to raise $90m, will save approximately $2.5M of administration fees of secondary offering.

Investor opinion
The decision to raise $90m may have a favorable effect on the IPO price, as it may indicate to investors that there is vision and plans for significant future growth. If raising additional equity a short time after IPO, the investors may feel question the need to raise more capital and may negatively influence the share price.

Focus on growth
If the IPO of $90m is successful, it will allow the owners to focus on the development and not be concerned by how to raise future funds (Wertz, 2013). Having necessary capital will assist A&A to start on the medium to long term development earlier and accelerate their growth.

Timing and market conditions
Careful timing of an equity capital raising is essential to ensure high share price. It may be difficult to attract the higher share prices at second offering. Further changes in the market conditions may also lead to additional uncertainty at the time of secondary offering.

Optimal size
The disadvantage of raising a higher amount is that A&A is selling more of its shares, and the owners are diluting their ownership of the business. This means