Equity Capital Markets

Initial Public Offering (IPO)

An Initial Public Offering (IPO) is the first public listing of shares of a formerly private company, as a result of a placement of shares to a wide range of institutional or retail investors.

The placement can be made of existing shares providing an opportunity for former shareholders to monetise their holding. IPOs carried out through a capital increase (newly created shares) are a source of financing for the company.

In an IPO, Corporate Finance helps the issuer structure the transaction, develop an adequate equity story, determine the most suitable listing place, the most appropriate time to bring it to the market and the best offering price. The Equity Capital Markets teams, working together with the Equity Research and Equity Sales teams, assist clients in stock market procedures and placement of the shares. The publication of very detailed information on the company's business, its accounts, and an analysis of its environment, is mandatory for IPOs.
 
Listed shares are offered to institutional investors, retail investors and possibly to the company's employees.

Rights Issue

Rights issues are capital increases where a company provides each of its shareholders with the right to buy a proportional number of new shares at a given price (usually at a discount) within a fixed period of time.

This type of capital increase avoids diluting the existing shareholders should they decide to exercise their rights. Rights are transferable, allowing the holders to be compensated by selling them on the market.

 Accelerated Book Building

ABBs are a form of placement that involves placing shares (be they new shares or existing shares) through institutional investors in a short time period, with little to no marketing. The bookbuilding of the placement is executed very quickly, ranging from a couple of hours to a maximum of one or two days. Underwriters may sometimes guarantee a minimum price to the seller of the shares.

An accelerated bookbuilding of primary shares is often used when the shareholders of a company agree to complete a capital increase and accept to be partially or totally diluted.

Another type of primary ABB consists in the recycling of new shares unsubscribed by existing shareholders in a rights issue (banks of the syndicate buy and exercise the rights of the shareholder, and sell them on the market).

ABBs of secondary shares involve the sale of existing shares of a company by one or several shareholders who want to sell their participation or part of it in the company.

Convertible Bonds (CB)

Convertible bonds can be converted into the company's equity at the discretion of the bondholders.  
Convertible bonds are attractive for issuers for several reasons:
 
• They are an additional source of financing (targeting a specific investor base) which is welcome in current market environment.
• The product allows for a smaller coupon than for a straight bond due to the option component embedded in the product.
• They target a specific investor base and allows for shareholders’ diversification upon conversion.
• When converted, they are redeemed in new shares, allowing a capital increase at a premium versus the share price prevailing at the launch of the CB.
• Execution is fast and efficient, with very limited communication, usually half a day.
• The structure is very flexible and can be tailored to meet issuers’ needs: issuer call to force conversion during the life of the CB.