5- Issuing Equities Flashcards
What is a primary issuance?
Where the company brings the company to the market for the first time
What is a secondary issuance?
A follow-on offer is one made by a company that has already issued shares into the markets, but wishes to raise more funds
How does an offer for subscription work?
When the company issues shares directly to the investor
How does an offer for sale work?
When the company sells shares to an issuing house, who then sells them on to investors
How does an offer for sale by tender work?
The issuing house markets the securities to the public and collects bids for the shares. Based on these bids, the issuing house sets a strike price. All investors who had bid at or above the strike price receive the shares for the strike price.
What is an Accelerated bookbuild?
The issuing house canvasses investors to build a book of interest. This can be done very quickly, with the interest assessed one day and the shares allocated the next.
What is Equity crowdfunding?
Direct investment in, typically, new companies through a funding website
What is a Placing?
When Institutions and wealthy individuals are offered shares, not just anyone
What is an Introduction?
Shares that are already in issue and trading on a secondary market, can be introduced to another market
What is a Rights issue?
A follow on issue of shares giving existing shareholders the right to subscribe to more shares in proportion to their existing holding
How do Rights issue ratios work?
Shares one has the right to buy per share held e.g. 1:3 right to buy 1 share for every 3 held
What is the Theoretical ex-rights price (TERP)?
Market price that a stock will have theoretically following a new rights issue
What is the Theoretical nil paid price?
ex rights price minus subscription price
What is a scrip/bonus issue?
A free follow on issue of shares to existing shareholders in proportion to their holding
What is underwriting?
Means of guaranteeing a minimum level of proceeds from a share issue
