The timing of an IPO will depend on a number of factors, including the complexity of the transaction, the issuer’s financial reporting timetable and current market conditions. An issuer is likely to require at least four to six months for the process, particularly where a premium listing is sought. A typical IPO timetable may be split into the below key stages (assuming a bookbuilding process).
An issuer will need to select a number of advisers including the lead bank or banks and the other banks in the syndicate, a sponsor (in the case of a premium listing), legal advisers, reporting accountants, registrars and financial printers. An engagement letter may be entered into between the lead bank or banks (often referred to as the global coordinator or joint global coordinators) and the issuer, particularly in the context of a dual track process, where IPO and sale processes run concurrently at the outset. The initial stages of the IPO will include a due diligence exercise, preparing a draft disclosure document (as discussed in more detail below) and drafts of the key transaction documentation and highlighting any issues that may affect the eligibility and disclosure processes. Once the draft disclosure document is in a fairly advanced form, the sponsor will clear any eligibility issues with the FCA and initiate the disclosure document review exercise. At this stage the lead banks may recommend limited ‘early look’ marketing to provide management with an opportunity to warm up key potential investors, subject to relevant legal and regulatory constraints.
The FCA recently introduced changes to the sequencing of the publication of the approved disclosure document and the pre-deal research reports produced by connected research analysts (ie, analysts in the research divisions of the underwriting syndicate banks). Management will be involved in briefing the connected research analysts with key facts about the issuer in connection with the preparation by the research analysts of independent pre-deal research reports. An issuer has the option of a combined presentation to connected and unconnected research analysts (ie, research analysts from banks not part of the underwriting syndicate) or split presentations to connected and unconnected research analysts. Prior to the publication of pre-deal research reports, an issuer is required to publish an FCA-approved disclosure document. This can be either a prospectus or, more likely given the stage in the IPO process, a registration document. A registration document is one element of a tripartite prospectus and comprises those parts of the prospectus containing information about the issuer, its prospects, risk factors and financial information, but without the summary or the securities note, which contains the details about the offering process.
In the case of a combined research analyst presentation, the publication of an FCA-approved registration document may be followed 24 hours later by the publication by the connected research analysts of their pre-deal research reports. At the same time the issuer is likely to publish an ‘intention to float’ (ITF) press announcement to signal to the market its intention to proceed with an IPO. In the case of split research analyst presentations, the unconnected research analysts are likely to be briefed by management following the publication of the registration document. In that case the connected research analysts are required to wait seven days following the publication of the registration document before publishing pre-deal research reports, and the issuer would typically publish the ITF at the same time. The seven-day delay is designed to create a level playing field for the connected and unconnected research analysts. The investor education process commences once the preparatory work has been completed, any early stage marketing or pilot-fishing meetings have occurred and the ITF has been published.
For a book-built offering, the formal marketing stage is likely to take the form of a one- to two-week management roadshow comprising a series of management presentations and one-to-one meetings with key potential investors. This is typically done on the basis of an FCA-approved price range prospectus or an unapproved draft ‘pathfinder’ prospectus. The choice of document will depend on a number of factors, including the type of offering and the target investors, and will have certain legal and timing implications for the process. In each case, where an issuer has already published a registration document, it has the option of publishing a composite prospectus or the remaining parts of the tripartite prospectus, namely the summary and the securities note. However, for the purposes of the marketing process it is expected that issuers will opt to publish a composite prospectus incorporating the previously published registration document with any amendments or updates, together with the summary and the securities note. Where the price range route is followed, the price range prospectus will require FCA approval and certain transaction documentation will be signed at the time of publication of the price range prospectus.
Pricing and closing
At the end of the book-building process, the price of the shares and size of the offering will be determined and the transaction documentation will be signed. Where a price range prospectus was used, this will comprise the outstanding transaction documentation not previously executed. The price will be announced and the FCA-approved composite prospectus published or, where a price-range prospectus was previously published, a pricing statement will be published containing all outstanding price-related information. Conditional dealings in the shares may commence at this stage.
Closing is typically on a T+3 basis, that is on the third business day following the announcement of the price. On closing, admission to the Official List of the FCA and to trading on the Main Market will occur, unconditional dealings in the shares will commence, the shares will be issued to investors and the issuer will receive the IPO proceeds, less any fees and expenses of the IPO.
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