The time from initiation of an IPO procedure until the consummation thereof normally amounts to approximately four to six months; the timeline is, however, to some extent dependent upon the choice of marketplace on which the shares of the issuer are to be listed. In this respect, it could be noted that Nasdaq Stockholm provides a fast-track alternative for companies that are very well prepared. In normal cases, such a fast-track process consumes five weeks in total.
When an IPO process is initiated, the issuer usually begins the process by retaining a number of advisers, including, for example, financial and legal advisers, auditors, public relations advisers and a certified adviser or a mentor (in the case of an intended listing on First North or NGM Nordic). The issuer typically enters into an engagement letter with the financial adviser or advisers.
The preparatory phase of an IPO on a regulated market will include contacts with the relevant stock exchange, which will appoint an exchange auditor for the purpose of assessing whether it would be appropriate to list and admit the securities in question to trading. In cases where the issuer seeks to conduct an IPO on an MTF, there is no exchange auditor involved. However, the issuer must, in the case of a listing on First North, engage a certified adviser in connection with the application process. It is the certified adviser’s obligation to guide the issuer through the listing process and to make sure that the rules of First North are fulfilled at the time of the listing as well as continuously thereafter. With respect to NGM Nordic, an issuer must instead engage a mentor. In addition, in many cases (regardless of the choice of marketplace) a pre-audit is performed by a separate auditor.
Further, the preparatory stage of an IPO will include the carrying out of due diligence exercises (legal, financial and tax). The legal due diligence is mandatory with respect to companies looking to get their shares admitted to trading on a regulated market. However, most IPOs include a due diligence exercise, regardless of the choice of marketplace. The nature of the review is somewhat more limited in comparison to due diligence performed in connection with a private merger and acquisition transaction.
The preparatory phase of an IPO also includes, for example, prospectus drafting and preparation of transaction documents (such as research guidelines, publicity guidelines, placing agreement and lock-up undertakings).
When the prospectus is more or less finalised, it is to be submitted to the SFSA for review and approval. Provided that the issuer’s securities have not previously been offered to the public or been admitted to trading on a regulated market, the SFSA shall, pursuant to the Trading Act, decide upon eventual approval within 20 business days of the submission of the application.
An IPO process will also involve analyst education and pre-marketing activities primarily involving the issuer and the financial advisers appointed. Such activities include, for example, analyst presentations, question and answer sessions, early-look investor meetings, pilot fishing and roadshows. Further, research reports will be prepared by the research analysts involved. The management of the issuer is normally expected to comment on drafts of such reports.
The issuer is also required to submit a formal application for admission to trading or listing to the relevant marketplace, the approval of which may be subject to several conditions, such as the prospectus being approved by the SFSA and the issuer fulfilling the applicable free-float requirements (which normally cannot, however, be determined prior to the allocation of shares).
Once the issuer feels confident that it will proceed with the IPO, the issuer often publishes an intention to float announcement. At this time, the research reports prepared by the involved research analysts will typically be published.
At quite an early stage in the IPO process, the issuer’s financial advisers usually provide an indicative valuation of the issuer. At a later point in time, before the commencement of the application period, a price range or a fixed price will be determined.
The application period may not begin prior to the prospectus being approved by the SFSA and published. Thus, the application period is typically initiated when the IPO is publicly launched, ie, when the prospectus is launched together with a press release containing the price range, or a fixed fee, and size of the offer. The application period is often a couple of weeks long.
The decision on the IPO price, allocation and signing of the placing agreement (and lock-up undertakings) normally occur the day before the first day of trading. Then, on the first day of trading, pricing is announced through a press release. During the period from the first day of trading until the settlement date (normally two business days), trading in the issuer’s shares is normally made possible through share loans from the main shareholders. At the settlement date, trading becomes unconditional, meaning that the investors become the legal owners of the shares in question.
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