flotation processs

what is a sponsor (aka nominated adviser aka listing agent)

they assess suitability for listing + coordinate the prospectus

what do they call this person on the LSE’s AIM

nomad (nominated adviser)

who usually is this person

investment bank, stockbroking firm or accountancy practice

what is corporate governance

the way a company directs + manages itself

• laws

• rules

• customs

• internal policy

what will often happen with corporate governance during the flotation process

split chairman/CEO roles, or appoint NEDs (non-executive directors)

this is to reduce the influence of any single individual over the company

3 members of the wider advisory team

reporting accountants

legal advisers

PR consultants + a corporate broker

what do reporting accountants do

attest to the validity of financial info in the prospectus

what do legal advisers do

ensure the prospectus is accurate and regulation-compliant

what do PR consultants and corporate brokers do

manage public perception + act as market interface

what are the reporting requirements during the flotation process

audited annual accounts

less detailed half-yearly/quarter-yearly reports

why is reporting important

builds investor trust

what is a lead manager in the deal syndication process

the sponsoring bank which gathers a syndicate of banks and brokers to market the issue

what is book building

the process of finding buyers

in the book building process, the lead manager acts as…

…the ‘book runner’

how is the price range found

from institutional feedback

how wide is the price range usually

10-15% wide

what is the insurance analogy

the agreement of underwriters to buy unsold shares

are shares always underwritten at the same price they are sold publically

no sometimes underwritten for cheaper so the firm will pay less per share if it comes to it

when are underwriters paid their fees

regardless of if demand actually falls short they get their payment

what is the risk of underwriting

ending up buying shares for more than they later prove to be worth

how does stabilisation occur during the flotation process

the lead manager buys back newly issued securities if the market price falls below a certain level

this gives the market time to absorb the increased supply of securities

stabilisation is typically executed via…

…the greenshoe

who requires disclosure that stabilisation activity is happening

the FCA - for regulatin

investors - so they know the market price might not be fully representative

what can exchanges use to suspend trading temporarily during volatility

circuit breakers