Overview

Whether an IPO or a marketed secondary offering, corporate issue or privatization, fund raising exercise or exit for existing shareholders, domestic or international, the same basic process applies to managing a successful offering. Bankers and advisors must be hired; the investment case must be developed or refined; decisions taken on listing location and markets and investors to be targeted; pricing and allocating shares to investors; and ultimately the menu for the closing dinner.

The new issue process has five stages. The main issues, as set out here, need to be dealt with in order, with the exception of documentation and marketing, which run in parallel. The three items in the marketing segment (marketing, pricing and allocation) run sequentially:

• Corporate issues

• Offer structure

• Regulation and documentation

• Marketing, pricing and allocation

• Aftermarket.

The offering process for an IPO will be necessarily more complex than that of a secondary offering. In the first place, many of the strategic issues that need to be addressed only apply to companies issuing shares to the public for the first time. Secondly, preparing the documentation is easier the second or third time, because the drafters can rely on the precedent set by the IPO prospectus and the company's annual reports. Finally, marketing and pricing are made easier by the fact that the company's shares are trading. Investors are at least somewhat familiar with the firm's investment case, and the market price of the shares gives a target price for a new issue.

This chapter provides a...