If an investor can put money in Hong Kong apartments, why can't he or she invest in an American hog farm?

The reason: hog farms haven't gone public. But someday they may, because investor money can be an alternative way to finance a business.

To show you how a company goes public, we talked with Ag Services of America, Inc. who did go public. Ag Services was the brainchild of three "farm boys" when it was started in late 1985. In 1987, their first full year, they had 88 customers and just over $3 million in revenue. By 1997, they served more than 1,250 farmers with revenues of $186 million.

In a nutshell, Ag Services, at Cedar Falls, IA, is one-stop shopping for crop farmers, says Gaylen Miller, chairman of the board. "We supply their crop inputs and finance them."

The original three "farm boys" who started Ag Services are still in key positions at the company. They are Miller, Henry Jungling, and Kevin Schipper.

So how could a small, start-up company experience such phenomenal growth in just 12 years? They obviously had a great idea. But another reason is they moved away from traditional sources of borrowing to put together the capital they needed. They went public and sold stock in their company.

"Nearly everything we sell, we finance," explains Miller. "We also provide cash advances for the farmer to pay for cash rent, fuel, repairs, irrigation costs and, in some cases, living expenses. We're their supplier and their banker.

"We simply could not have borrowed the funds needed from traditional sources to enable the business to cash flow at the growth rate we were experiencing," he adds. "We needed equity capital to secure the line of credit we needed to support our rapid growth."

Could you, a hog producer, sell stock in your business to raise capital to expand? Possibly. But there are some stiff tests to meet. It took Ag Services about 6-7 months from inception of the idea to go public to when their letters appeared on the stock market listings.

"Our first step was to make the right contacts," Miller says. "We were fortunate to have met and worked with an investment banker who was 'close' to Wall Street. He put us in contact with the right people and the contacts continued to grow." That was in 1991.

"The next step was to determine if we were even a candidate for a public offering," he says. "You can't just look at what you have accomplished in the past. More important is what the opportunities are for future growth.

"One of the responsibilities we now have is not only to serve the customer and provide him with good products and service but to also provide the maximum return for our shareholders who invested their capital," he adds.

A huge question was how they would use shareholder-invested capital to grow the business so it would become a more profitable business and, therefore, make sense to a potential investor to put money in your business?

The underwriter did his research and determined that Ag Services would be a candidate to go public. Then the hard work started.

"A team came in and scrutinized the business and financial statements to ensure everything was in order," Miller explains. "They also looked closely at our management team.

"Once we passed those scrutiny tests, it was a matter of selling our program, our concept and our ideas. We went on what they called a road show where we made numerous presentations to various investor groups."

Most of that was in larger cities, mainly the East Coast. "You never know how well it will be received," Miller says. "In our case, fortunately, it was well received and the IPO (initial public offering) was completed with a listing on the NASDAQ (National Association of Securities Dealers Automatic Quotations)."

In December 1996, the company moved to the New York Stock Exchange (NYSE) under the symbol ASV.

Ag Services stock originally sold for $8.25 per share. A 2 for 1 split gives that stock a basis of $4.12 per share and the stock was recently selling at about $18 per share, he says. That's an average annual growth of more than 27% per year, compounded, over the last six years.

Ag Services has done well for its shareholders. Plus, the original owners have been able to realize their dreams at a level they couldn't have otherwise. It has been personally and financially profitable for them.

A crop producer buys and finances seed, fertilizer and chemicals from Ag Services while receiving credit for cash rent, fuel, repairs and other operating needs.

With their new AgriFlex Credit Program, Ag Services now offers intermediate financing to some farmers who qualify."We're offering loans amortized over 3 to 7 years," Gaylen Miller says. "It can be for such things as facilities, land, machinery and equipment."

Since Ag Services doesn't take deposits from customers, the company isn't regulated like a bank. Therefore, they aren't restricted by per farm lending limits like banks are.

Ag Services has experienced tremendous growth over the last 10 years. But with only 0.8% of the farm supply market, they expect more growth.