Preliminary Prospectus

Now the company has approval from the Registrars it can send out the preliminary prospectus to potential investors that have shown some interest, announcing its intention to list on the stock market. This is done in an effort to form a collective of investment banks, known as a ‘syndicate’, that will deliver the initial offering of shares to the public.

Roadshows

Members of the board will attempt to rally interest at meetings known as “roadshows”. The IPO Roadshow process involves key members of management making presentations about the company, highlighting the contents of the prospectus, and then answer any questions that investors may have.

Tombstone Ads

‘Tombstone Ads’ is another marketing technique used by companies making an initial public offering. These are used as an announcement for the company that is issuing shares for sale, often mailed to investors who already own securities. The Tombstone outlines the number of shares available, the date they can be brought, how they can be purchased and any existing syndicate members.

This process usually lasts around two weeks. During this period private investors can place orders with the brokers for shares, without knowing the final price of the shares or the final allotted amount that will be received. In the case of high demand, the process may end earlier than anticipated. Once the deadline has passed no more orders can be placed. If a cash investment has not been made by this time, then the order will not be fulfilled by the broker.

Allocation and Placing

The company and underwriter need to establish a price and the set amount of securities that will be offered.

The finalised price will be determined by a number of factors, such as current market conditions, company performance, the interest shown on the “roadshow”, and the current economic climate.

In the “Basis of Allotment”, the number applications from investors is shown. This will form the basis which the final allotment of shares and what they will be sold at.

In the case that the offer is oversubscribed, potential investors may not be able to gain the proportion of shares they initially wanted. In that case, investors will receive a smaller amount of shares than anticipated and will be refunded the difference. Some of the offered shares may have a minimum holding period. These are usually held by key members of management or employees.

When the price and allotment are finalised shares can be exchanged for the correct cash amount, released into the investor accounts on the first day of trading.

During-IPO: Due Dilligence

During-IPO: Due Dilligence

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During-IPO: Admission

During-IPO: Admission

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If you require additional IPO information please get in contact with CFPro Today.

If you have any questions regarding the IPO Process or require consultation on an IPO Project, CFPro can help. Assisting various companies from different industries list their desired stock exchange.
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