Listing creates unlimited access to capital resources
An Initial Public Offering (IPO) is the process whereby a company offers shares to the public for the first time via a listing on a stock exchange. IPOs are costly and demanding processes, and so the company’s managers and shareholders should reflect very carefully on whether such a transaction is appropriate, compared to other financing sources:
- Why go public?
- What capital is needed and for what purpose?
- Is the company ready to comply with the stringent rules associated with public trading?
- Are there any other options to consider?
Going public is a very important step in the evolution of a company and the pros and cons should be carefully weighed. The IPO process typically comprises three stages:
- Internal preparation
- Execution
- Post-IPO
Internal preparation
This part of the process begins several months before the operation itself. It involves preparation of the company on several levels:
- Strategy: definition of a consistent strategy, assessment of the financial and managerial track record;
- Operational: enhancement of financial and management information systems, communication plan (investors, customers, employees) and due diligence (financial, fiscal, operational, business and legal);
- Corporate Governance: establishment of a complete and consistent Corporate Governance model.
Execution
Based on the due diligence outcome, pre-marketing by the international sales forces will commence, followed by marketing and bookbuilding. The main issues addressed in this part of the process are the size and structure of the offer, the syndicate structure and analysis of the demand.
During the roadshow and the bookbuilding process, institutional investors show their interest by stating how many shares they would like to obtain at what price, within a predefined range. The offer price will be determined according to demand and the quality and price sensitivity of the investors. The shares are allocated to investors on the basis of predetermined criteria, such as feedback on research, investment horizon and timeliness of orders.
Post-IPO
The underwriter is committed not only to the execution of the IPO but also to its follow-up. The market has to be stabilised immediately after the listing and the underwriter should bring long-term commitment. As lead manager, we can advise and assist your company in setting up an appropriate investor relations programme and a ‘non-deal’ roadshow.