Square One Law Participates in IPO Round Table
The corporate commercial team at Square One Law was delighted to take part in the latest Insider Round Table event which focussed on Initial Public Offerings (IPOs).
Hosted by Deloitte in collaboration with Square One Law, corporate partners Jeremy Swift and James Bryce were joined by a group of fellow experts, including Square One Law client Utilitywise, to discuss some of the issues and intricacies of the IPO process.
The general feeling around the table was that as we continue to move out of the recession, North East businesses are looking forward and towards growth opportunities. Funding this growth is always a key issue and one option for businesses is the IPO route, with brokers and investors showing strong demand for solid UK small and mid cap companies.
In particular, the tech, retail and property sectors have all seen an acceleration of IPOs in the last 12 months and the London Stock Exchange (LSE) has seen a record number of IPOs in the first quarter of 2014 along with a very strong pipeline for the coming year.
Mark Fahy of the London Stock Exchange said: “There is a significant wedge of capital out there looking for returns. One reason for this is there is a large amount of international money, typically from the US, trying to get a foothold in Europe. Another reason is that interest rates remain at record lows and this has brought a lot of net inflows particularly into income funds and into equity funds.”
Jeremy Swift expanded: “There’s definitely an appetite for IPOs in the North East. At the moment there are 18 public companies operating in the region. There’s room for more and there are several that are in various stages of the IPO process, these tending to be those that are looking for fast growth. It won’t be right for every company of course but we certainly have the infrastructure in the region to support any company that is seeking to do an IPO.”
Once a company has decided an IPO is right for them, they need to appoint advisers to lead them through the process. On AIM the key advisers are the Nominated Adviser (Nomad) and the broker. Other advisers that need to be appointed are accountants (usually the company’s auditors) and lawyers.
One company that has been through the IPO process is Utilitywise, Chairman Richard Feigen explains: “Utilitywise’s IPO has been held up as an exemplar deal. The IPO raised capital for the company which subsequently made three acquisitions and the share price has gone up fivefold. They have delivered on everything they promised to deliver. They have had access to capital and been able to release that capital to further growth and to make good returns for shareholders. The board has grown, partly through acquisitions but also by bringing experts particular commercial areas.”
Deloitte corporate finance partner David Frith said: “I would always encourage companies to seek advice early. If you engage early with advisers, with non-execs or anyone else that has experience of the process, this can only be a good thing. Getting yourself properly prepared for the process is fundamental in getting it right.
James Bryce continued: “There are very compelling reasons why an IPO is a very competitive and attractive option. We work with businesses from a very early stage in structuring their shareholdings and spotting potential due diligence issues – all with a view to making the IPO process as smooth as possible.”
While the panel members were all cautiously optimistic for the year ahead, there is a clear window of opportunity for IPOs. There is consensus that the markets are going to be open for at least another year for UK companies, maybe two if the recovery really takes off, so now is an ideal time for North East companies to take advantage.
A full round up of the event can be found on the Insider website http://bit.ly/1rS3u4z
For advice on floating your company contact Jeremy Swift on 0843 224 7923 or email jeremy.swift@squareonelaw.com