Will 2011 be the year of the IPO?
Taylor Wessing and Arbuthnot Securities forum explores complex flotation process, market dynamics and challenges
London – IPOs have been faced with challenging market conditions in recent years, but all the signs appear to point toward a better 2011. Last year saw a quadrupling in the number of IPOs brought to market in the UK, with total fundraising up 500% on 2009, according to the London Stock Exchange. This year has already seen a strong start for the market, with several high profile listings already around the world – including HCA, the biggest private equity backed IPO ever – and plenty more in the pipeline.
Whether this signals a true and lasting return to form for the IPO market was up for debate at a forum today hosted by international law firm Taylor Wessing and investment bank Arbuthnot Securities. The discussion explored in detail whether 2011 really will fulfil this potential and be the year of the IPO, in particular for private equity backed companies following recent activity such as Nielsen and Kinder Morgan, as well as HCA.
The event’s speakers – which included Taylor Wessing capital markets partner William Belcher, Arbuthnot head of research Craig Fraser and head of equity sales at Arbuthnot, Simon Wickham – provided insights and perspective on the myriad market dynamics at play, and offered advice to private equity firms and company executives on navigating the IPO process. Among the issues explored were:
- The importance of valuation
Craig Fraser, Head of Research at Arbuthnot said: “Don’t even think about an IPO before you have undergone a full and proper valuation based on forecast earnings and use of funds. Remember, premiums can also be obtained if you can demonstrate attractive characteristics such as a dynamic growth story, a market leading position and a strong management team. Consider these points carefully; otherwise you may not get value for money.”
- Considering the legal framework
Capital Markets partner at Taylor Wessing William Belcher commented: "IPO readiness is key, and so there should be sufficient preparatory lead time, combined with an acceptance that timetables will change if market conditions are not right. Also important is early consensus between management and institutional sellers on seller lock-ins and what the board will look like post-IPO."
- Measuring the markets
Arbuthnot Head of Equity Sales Simon Wickham says: “Make a considered judgment on whether you should join the Main Market or AIM. An AIM listing is likely to be less costly for listing and maintenance, but the Main Market offers other benefits. Make sure you know what these are so that you can carefully decide on which one suits your company best, allowing you to make the most of your IPO.”
The event also featured a panel discussion, with panellists including Ruth Lea, Economic Advisor to Arbuthnot Banking Group, Non-Executive Chairman at Caithness Petroleum David Donnelly, Chief Investment Officer at GCP Capital Partners Brian Phillips and Arbuthnot Securities Chief Executive Neil Kirton.
ENDS
Lawyers William Belcher, Emma Danks, Martin Winter, Tim Stocks
Notes to Editors
For more information please contact:
Sarah Le Cheminant, Taylor Wessing
+44 (0) 20 7300 4930
Email
Scott Addison, Spada
+44 (0) 20 7269 1430
Email
Taylor Wessing LLP is a leading international law firm comprising of over 750 lawyers. The firm is dedicated to providing support for commercial organisations doing business in Europe, the Middle East and China across a full range of legal practice areas.
About Arbuthnot Securities
Arbuthnot Securities is a full-service, integrated investment bank, and a subsidiary of Arbuthnot Banking Group. Arbuthnot Securities offers a full range of institutional stockbroking and corporate advisory services and is focused on UK growth companies.
Arbuthnot Banking Group consists of two other main subsidiaries providing banking services to a wide cross-section of clients.
Arbuthnot Latham is the private banking and wealth management arm of the group. It provides banking, financial planning and investment management services to clients.
The retail banking arm of the group is Secure Trust Bank. Secure Trust Bank provides a wide scope of services to customers including personal loans, current and savings accounts.
