Overview

The marketing of equity new issues is a sophisticated process which involves three stages: pre-marketing to prepare investors for the issue; formal marketing where direct approaches are made to potential investors; and finally, pricing, allocation and distribution of the shares.

The marketing process runs concurrently and beyond the main documentation process and involves different arms of the lead bank. However, many of the people from the company who are involved in documentation will find themselves also involved with the marketing of the new issue adding to the pressure on management at a critical time. Depending on market conditions, type, size and complexity of the offering, marketing can last from four hours to four months and even longer.

This chapter concentrates on the marketing for offerings using the bookbuilding structure as set out in Table 9.1. Marketing of fixed price offers includes most of the same activities, but the pricing of the offer occurs at an earlier stage.

The initial phase is devoted to educating investors so that they understand the company and the industry in which it operates. Typically a major research document is published by the brokers to the issue and distributed to investing institutions up to eight weeks prior...