Jan 7, 2019 | Techcelerate Ventures |
IPO GUIDE A GUIDE TO LISTING ON THE STOCK EXCHANGE CONTENTS THE IPO EXPLAINED 4 WHY GO PUBLIC? 6 THE IPO JOURNEY 8 THE ROLE OF ADVISORS 12 LISTING ON EURONEXT 14 LIFE AS A PUBLIC COMPANY 21 ATTRACTING INVESTORS 26 + % 2 A guide to listing on the stock exchange I EURONEXT 3 A guide to listing on the stock exchange I EURONEXT THE IPO DEFINED An IPO (Initial Public Offering) is the most common way to list a company's shares on the stock market. Concretely, it takes the form of a capital increase or sale of shares currently held by investors. By offering new or existing shares for sale, the company opens its capital to new investors, both institutional and retail. In a private placement, securities are sold directly to a select group of professional/ qualified investors. No officially approved prospectus is necessary unless the company intends to list on a regulated market. For an initial listing on Euronext Growth or Euronext Access, the candidate must provide Euronext with a document summarizing key information. While generally faster and less expensive, a private placement results in lower visibility and liquidity. With a direct listing, shares are simply made available for trading (without increasing capital through an IPO or a private placement). An approved prospectus is not necessary unless the company intends to list on a regulated market. If the company's shares have already been admitted to trading on another regulated market within the European Union, issuers that wish to list on a regulated Euronext market can apply for Euronext's Fast- Track process. IPO $ IPO $ OTHER TYPES OF LISTING While IPOs are popular with business owners, they are not the only listing option, and you can opt for a range of transaction types no matter which market you select. But depending on how you list, the amount you raise and the market you choose, you may still need to issue a prospectus approved by the competent authorities. PRIVATE PLACEMENT DIRECT LISTING EXPLAINED THE IP TAKING A COMPANY PUBLIC IS A MAJOR DECISION, AND A MILESTONE FOR ITS OWNERS. COMMON REASONS TO LISTALL VERY SOUND INCLUDE TAPPING INTO MARKETS TO ACCELERATE GROWTH, RAISING VISIBILITY, ENABLING AN INVESTOR TO EXIT, AND PREPARING FOR AN INHERITANCE OR BUYOUT. WHATEVER THE INITIAL AIM, GOING PUBLIC CHANGES THE DIMENSION AND SCOPE OF THE COMPANY, BOOSTING ITS CREDIBILITY AND SIGNIFICANTLY CHANGING ITS RELATIONSHIPS WITH CLIENTS, SUPPLIERS AND BANKS. LISTING ALSO GIVES MANAGEMENT A UNIQUE OPPORTUNITY TO MOBILISE ITS OWN TEAM AROUND A LONG-TERM PROJECT. IF YOU PLAN TO TAKE YOUR COMPANY PUBLICA GAME-CHANGING TRANSACTION BY ANY MEASURE THIS GUIDE IS DESIGNED TO PROVIDE YOU WITH THE EXPERT INSIGHTS AND DETAILED GUIDANCE YOU NEED. 4 A guide to listing on the stock exchange I EURONEXT 5 A guide to listing on the stock exchange I EURONEXT BENEFITS FOR YOUR COMPANY Listed status signals to the business and financial community that your company is sound, open to the world and interested in expanding its operationsattractive qualities by any measure. Key benefits of listing include: Foster growth and expansion by using capital markets Enabling your company to raise funds to finance growth Creating a liquid market for its shares Boosting your company's visibility at home and abroad Raising its profile and status with all stakeholders Promoting employee buy-in and commitment Facilitating recruitment Allowing legacy investors to exit Gaining visibility through index inclusion BENEFITS FOR SHAREHOLDERS Stock-market listing allows your company to finance operations without borrowing, while raising its profile and enhancing its image and credibility. Other benefits for shareholders (including the company's founders and executives), include: GO PUBLIC? As candidates prepare for listing, they have an opportunity to set out a clear vision of their business strategy for the financial community, for customers and for staff. Their Board of Directors can also use this process to look ahead and, if necessary, consolidate existing structures. Last but not least, listing is a means of rallying employees to a shared project. Listing on the stock exchange enhances and consolidates your company's image at home and abroad and can transform a brand into an asset in its own right. Listing also generates internal benefits for companies, making it easier to recruit skilled co-workers and creating greater loyalty among existing staff. Listed status sends a message about the expertise of the men and women who work for the company and increases their value. And listed companies generally offer attractive, share-based employee profit-sharing plans, such as stock options and company savings plansincentives that can motivate staff and increase their commitment to company growth. Greater liquidity Opportunities to divest/optimise holdings over time Simpler succession planning Guaranteed independence Scope for increasing your company's value over time Transparent and unique price CONSEQUENCES FOR THE COMPANY Allocate time to investor access and relationship Communicate to investors at all times, regardless of the financial results Ensure attention remains on the business Take a step back: markets can be volatile and the behavior of your short-term share price is not always meaningful Mind your communication: pay extra attention to insider information FOR SHAREHOLDERS Lock-up periods for institutionnal investors Disclosure when shareholding thresholds are crossed Volatility in share price Dilution BENEFITS FOR THE COMPANY Raise funds to finance organic expansion (R&D, international, etc.) Foster external growth Enhance domestic and international profile/reputation Better structure the company Motivate staff and promote loyalty Facilitate recruitment Highlight your ambition and long-term objectives Diversify sources of financing with fast and low-cost access to capital Empower management Potential eligibility to world-class indices FOR SHAREHOLDERS Benefit from higher liquidity Facilitate exit of non-strategic / historical shareholder Transparent and unique price Facilitate the succession/inheritance Access to structured, regular and transparent information on the company 6 A guide to listing on the stock exchange I EURONEXT 7 A guide to listing on the stock exchange I EURONEXT PRE-IPO PREPARATION COUNTDOWN TO EXECUTIONKEY STEPS Pre-IPO planning and preparation Approx 6 MONTHS before pricing Approx 2 WEEKS before pricing AFTERMARKET Approx 2-3 MONTHS before pricing 1-2 MONTHS before pricing 1st STEPS STRUCTURING PRE-MARKETING PLACEMENT POST-LISTING 1 2 3 4 5 PRE-IPO PREPARATIONS In the first step, management meets with potential IPO partners to create a working group that will support the IPO project and follow the company on the aftermarket i.e., in trading following the IPO proper. Starting with the banking syndicate, the company holds informal discussions where the timeline, the structure of the proposed deal, and a first intrinsic valuation are presented by the corporate finance teams. To be realistic, a provisional timetable should take into account business development, cash consumption, and market windows. Once this is done, the structure of the syndicate and the terms of the transaction are clearly defined in engagement letters. The company may round out its IPO working group with at least a communications agency, legal advisor(s) and capital markets accountants. At this point, workshops are organised to achieve the right group structure, suitable corporate governance, an efficient tax strategy and adequate financial reports, and to pre-empt regulators' requirements. If the issuer is well prepared, the IPO process will then take 5-6 months to complete. The IPO process is best understood through two simultaneous pre- transaction efforts: drafting the prospectus and financial communication. ENTREPRENEURS LOOKING TO RAISE CAPITAL HAVE A WIDE CHOICE OF FINANCING OPTIONS, INCLUDING PRIVATE EQUITY, VENTURE CAPITAL, TRADE SALE OR AN IPO. BUT THE DECISION TO LIST ON A PUBLIC MARKET HAS IMPLICATIONS WELL BEYOND SECURING A NEW SOURCE OF FINANCING: THE STOCK MARKET BRINGS A HIGHER PROFILE AND INCREASED CREDIBILITY, WHICH FUNDAMENTALLY CHANGES A COMPANY'S INTERACTION WITH ITS CLIENTS, PARTNERS, SUPPLIERS AND OTHERS. AN IPO IS A MAJOR MILESTONE IN THE LIFE OF YOUR COMPANYA RARE OPPORTUNITY TO OVERHAUL YOUR BUSINESS STRATEGY AND CAPITAL STRUCTURE, AND TO ACHIEVE A LONG-TERM VISION THAT SERVES BOTH SHAREHOLDER INTERESTS AND MANAGEMENT INTERESTS. PRIOR TO AN IPO, THE EXECUTIVE TEAM NEEDS TO ASSESS ITS READINESS FOR SUCH AN OPERATIONWHICH MAKES PRE-IPO PREPARATION ESSENTIAL TO A SUCCESSFUL LISTING. THE IPO JOURNEY INVESTORS Prepare slideshow: The listing candidate and its advisors draw up a marketing document for use in meetings with investors and equity research analysts. Prepare research report: Equity research analysts give their assessment of the company and propose a price range. Pre-Deal lnvestor Education (PDIE): Banking syndicate's equity analysts meet investors to discuss research report and gauge response. Book-building: Orderbook and public offering open; management meets with investors (roadshow). Trading starts the day after pricing is finalised. Analysts' presentation: Management presents the company to equity research analysts in the banking syndicate before they prepare their research report. Research reports distributed to investors. Definition of price range. Pricing: Offering price set and orders allocated. Early-look meetings / Pilot fishing: Bilateral, private meetings of management with a limited number of investors before the IPO is launched. Aim: present the company and test/fine-tune messages. approx. 2 weeks approx. 2 weeks > > > KEY STEPS IN STOCKMARKET LISTING > > > Prepare Registration Document: Listing candidate and advisors draw up a document presenting the company, its sector, and key business, including accounting and financial data. This contains all information that will subsequently be shared with investors and analysts (in all media), ensuring fair and equal dissemination to all parties. Prepare the Equities Note: Document prepared by the company and its advisors, setting out the main features of the deal. Confidential filing of core document with local financial markets regulator. Filing of Registration Document Document is published on the websites of Local financial markets regulator and the company. The proposed listing is now in the public domain. Local financial markets regulator approves Prospectus (Registration Document + Equities Note is published on local financial markets regulator and company websites. Financial markets regulator & Euronext presentations: Meetings with market authorities to present the proposed listing and confirm the timeline. At least 5 days Review of Equities Note by Local financial markets regulator. Local financial markets regulator reviews the Registration Document, and can ask questions/request further information and/or changes to finalise/clarify content. At least 4 weeks needed for Local financial markets regulator review REGULATION 8 A guide to listing on the stock exchange I EURONEXT 9 A guide to listing on the stock exchange I EURONEXT DID YOU KNOW? 55% of individual shareholders keep their shares for more than 5 years Over the last 5 years, retail investors accounted for 21% of the amounts raised through IPOs After several interactions with management, the analysts then offer the company a final review of their report, excluding the valuation so as to maintain their impartiality. 2) PRE-DEAL INVESTOR EDUCATION (1 MONTH BEFORE THE IPO) Pre-deal investor education (PDIE) is a critical phase in determining the company's valuation. It starts with equity research analysts distributing their pre-deal report to key institutional investors, introducing the investment case and their valuation range. At meetings without management present, the analysts answer investors' questions on the issuer and collect feedback before the price range is set. This allows banks to gauge market sentiment and collect first impressions on the valuation. Working with the company, they then adjust the price range and the slideshow ahead of roadshow meetings. The range can be set up to +/-15% and typically includes an IPO discount to reward the risk taken by investors allocating funds to a newly listed company. 3) MANAGEMENT ROADSHOW (2 WEEKS BEFORE THE IPO) Demand is generated by two types of investors: institutional investors with large equity positions retail investorsindividuals who are not professionals and trade through traditional brokers or online structures Finally, the offer period opens with a symbolic management presentation to the media, analysts and investors. In the hours and days that follow, an intensive series of one-on- one meetings, one-off market events and press lunches are scheduled for institutional investors and journalists. Investors are targeted depending primarily on their location and specific investment strategy. MEDIA PLAN A media plan harnesses a range of channelsradio, press, web, etc.to generate additional visibility, primarily with retail investors, as the company uses the window of high exposure to ramp up interest among investors. BOOK BUILDING The most common form of book building uses a price range. During the Offer Period, banks receive orders from fund managers indicating the number of shares they might wish to acquire at a pre-determined price within the range. As investor meetings are held, banks record investor interest in the book. This demand is flexible, as an order can be withdrawn at any time during the roadshow. PRICING The final price is set based on demand at various points in the price range. Since demand decreases as the price rises within the range, the company must strike a balance between the amount raised, the expected valuation and the momentum it seeks to generate. If demand is weak, at least 75% of the base share offering must be subscribed. Below that threshold, the offering will be deemed unsuccessful and the deal will be cancelled. Other less common mechanisms exist to determine the IPO price. For instance, prior to the placement period the advisors, together with management, could decide to adjust both the IPO price and the number of outstanding shares. Overall demand at this unique price will determine the final amount raised under a firm upper limit. As an alternative to fixed-price transactions, a minimum price could also be set up before the placement. In this case, book building works like an auction. FLEXIBILITY CLAUSES: THE EXTENSION CLAUSE AND THE GREENSHOE An IPO is "oversubscribed" when demand exceeds 100% of the base deal. The company can then opt to exercise flexibility clauses, starting with the extension clause, which raises the offer size to 115%. Additionally, the over-allotment optionalso called the greenshoeoffers an opportunity to increase the total offering by a further 15%, raising the offer size to 132% of the initial base deal. Usually exercisable for a period of 30 days following the listing date, this option acts as a stabiliser. For instance, if the stock price slumps below the offering price during this period, the underwriter can provide support by buying back shares in the market using the amount allocated to this greenshoe. These flexibility clauses are an opportunity for the issuer to increase its aggregate gross proceeds (part of the primary offer) or to allow shareholders interested in selling to cash out part of their investments (part of the secondary offer). > How do we build an equity story? > What are the main features, strengths and weaknesses of our sector competitive environment, KPIs, investor concerns, etc.? > How can we get the best valuation for our IPO? > What type of financial guidance should we provide for our IPO? > How should we manage our relationship with the market regulator? > What is the timetable, the review process, best market practice, etc.? > What proportion of cornerstone investors would be acceptable for the market? > What actions does your company take on ESG? TYPICAL ISSUER QUESTIONS FOR ADVISORS the financial regulator interacts with the advisors until every issue is addressed. Once the regulator grants final approval, a press release announces the intention to float (ITF), disclosing the offering's timing and details to the market. This kicks off the marketing phase. REACHING OUT TO INVESTORS While the prospectus is being drafted, a marketing strategy aimed at generating investor interest and momentum is drawn up. PREPARATION OF INVESTOR MEETINGS In contrast to the detailed and comprehensive prospectus, a slideshow is the marketing tool for investor meetings. Content is drawn exclusively from prospectus content and is carefully reviewed by the regulator, along with the IPO website, press releases and other communication materials. These core documents are fine-tuned throughout the IPO process, up until the management roadshow. The communications agency sets up training sessions to prepare management for one-hour meetings with investors. These are usually conducted by the CEO and the CFO. Management must master all stages/aspects of these events so as to highlight the equity story and valuation drivers most effectively. 1) EARLY-LOOK MEETINGSPILOT FISHING (2 MONTHS BEFORE THE IPO) One to three months before to the IPO date, the underwriter(s) schedule(s) "pilot-fishing" through several one-on-one meetings with targeted investors. The aim of these early-look meetings is to explain the future listed company's business model, gauge initial market sentiment on the company's equity story, andabove allcreate traction with investors. Based on potential interest detected at these meetings, which are spread out over time, the company can adjust its IPO project, and has the opportunity to exit the process without a significant financial commitment at this stage. If the meetings generate formal commitment subscriptions, contractual orders appear in a specific section of the prospectus, securing pre-guaranteed demand from anchor and cornerstone investors. Highly appreciated by the market, these may be a requirement in some sectors, their expertise in the company's industry providing additional security and credibility. A management presentation is also planned with the syndicate's equity research analysts to introduce the company's business and relay its equity story. Over approximately one month, the analysts then draft a detailed investment research report giving their independent assessment of: the company's business its competitive environment for a comparable peer group an indicative valuation range. REGISTRATION DOCUMENT (PROSPECTUS/ INFORMATION DOCUMENT) The prospectus is a formal legal document in two major partsa description of the company and the terms of the transaction that contains a standard set of chapters. The first part discloses core information to the market, building a bridge between private and public information. Its main sections describe the issuer's business and discuss risk factors, financial information, management and corporate governance. A securities note then defines the offering metrics, including the number of shares to be issued, the price range, a timetable for the subscription period, and the use of proceeds. The information in this comprehensive document is also distilled into an executive summary. 1) PREPARATION PHASE From the kick-off meeting to the settlement and delivery date, the IPO process typically takes four to six months. KICK-OFF MEETING Once all parties for the IPO journey have been selected, the kick- off meeting brings advisors together for the first time to define their roles and responsibilities. Key metrics, including the projected timetable, are introduced during this session. Initial workshops for drafting the prospectus follow. DUE DILIGENCE A management presentation (also called due diligence session) is organised to ensure that all information about the issuer is appropriately disclosed in the offering prospectus. The aim is to protect the company, its board of directors and the banking syndicate, since all future investors will rely wholly on information disclosed in the prospectus. Throughout the IPO process, additional due diligence sessions may be planned at each key milestone to ensure that information disclosed is still up to date, although this is unusual for small transactions. At this stage, the deal remains completely confidential. 2) REGULATORY REVIEW The financial regulator conducts a thorough review to ensure that the prospectus contains the information investors need to decide whether to take part in the offering. The review period starts when a first draft of the prospectus is filed with the regulator. Through Q&As and revised versions of the prospectus, 10 GUIDE D'INSCRIPTION LA BOURSE I EURONEXTE 2018 THE IPO JOURNEY 10 A guide to listing on the stock exchange I EURONEXT 11 A guide to listing on the stock exchange I EURONEXT LEGAL ADVISORS Legal advisors with expertise in capital markets provide guidance throughout the IPO process, and take part in the interaction between the company and the country's regulatory authority. They supervise the company's legal due diligence, draft legal sections of the prospectus (sharing the master copy of the prospectus with the corporate finance team) and advise the management team on their legal and regulatory duties before and after the IPO. Advertising and research guidelines drawn up by the legal advisor(s) ensure that the information in the communications materials and the analysts' research report complies with applicable securities law. In the case of a deal counsel, a sole lawyer advises both the company and the underwriters; this is typically used in small transactions. In other cases, banks may require that lawyers dedicated solely to the management of their own liabilities be appointed. AUDITORS The auditors are responsible for guaranteeing the accuracy and fairness of the historical financial information and financial position presented in the prospectus, in addition to the company's annual financial statements. They sign a comfort letter validating the statements and reports in the prospectus. Management may opt to keep their existing auditors (if they have a dedicated capital markets department) or appoint a new team to work specifically on the IPO process. COMMUNICATIONS & PUBLIC RELATIONS AGENCIES Using their communications expertise, these two types of agency present the company to investors in the most attractive light. They also handle the company's image in response to external events. The communications agency helps prepare the candidate's equity story, markets key takeaways through various communication materials used during the marketing phases, and organises media training for managers involved in the IPO process. It also produces content, including a presentation for the roadshow, a dedicated website for the IPO, and press releases targeting both institutional and retail investors. Additionally, the communications agency creates a media plan to capture and hold retail investors' interest and ensure global exposure for the company. Public relations agencies are not always used, but they can be a valuable addition to the communications agency by focusing on press coverage and other factors that shape public perceptions of the company. EQUITY ADVISORS Expert equity advisors contribute an independent point of view serving the best interests of the company. Concretely, from the very start of the IPO process to the first day of trading, the equity advisor provides preliminary considerations of the full IPO process, helps the company select advisor(s), tracks the transaction, assists in preparing and developing the company's equity story, and supervises the marketing/placement phase. LISTING SPONSORS Listing sponsors are banks or independent advisors that play the lead role in the listing process. They are accredited by Euronext, and their special status and presence are designed to enhance investor confidence. Prior to any listing, a certain amount of legal "housekeeping" and preparation is required to ensure that shares are suitable for listing, that the company complies with relevant legal requirements, and that current and future investor needs are met. The listing sponsor is a key player for the company and investors, and acts as the primary contact for Euronext. The appointment of a listing sponsor by the issuer is mandatory for an admission to listing on Euronext Growth, Euronext Access and Euronext Access+. OTHER ADVISORS Depending on the specific features and nature of an IPO, additional advisors may be involved. These include intellectual property advisors, independent real estate assessors, tax advisors and technical advisors on due diligence. ? THE ROLE OF ADVISORS Banking syndicates represent the group of investment banks that come together to execute an IPO. In most cases, they are structured to achieve a good fit based on each member's placement capacity and equity research offering. Usually, one bank is named "Global Coordinator/Lead Manager", which means it is responsible for coordinating and implementing the IPO and maintaining a relationship with the market regulator. The other banks act as Joint- Bookrunners/Co-leads; their role and scope depend on the syndicate (structuring, placement, research). COMPANIES INTERESTED IN GOING PUBLIC MUST FIRST SET UP A WORKING GROUP, PAYING CAREFUL ATTENTION TO THEIR CHOICE OF PARTNERS. THE REASON IS SIMPLE: AN IPO IS A COMPLEX DEAL THAT TAKES FIVE OR SIX MONTHS TO COMPLETE, AND THE FIT, EXPERIENCE, AND SECTOR KNOWLEDGE OF THE COMPANY'S ADVISORS ARE CRITICAL TO SUCCESS. WHICH MAKES IN-DEPTH UNDERSTANDING OF EACH ADVISOR'S ROLE ESSENTIAL TO THE SELECTION PROCESS. Investment banks offer a wide range of financial services for complex transactions. During an IPO, they play a number of roles at different stages in the process. These include underwriter, where the bank acts as an intermediary between the securities issuer and investors, and financial advisor, where the bank implements a transaction as a trusted partner for its client. Globally, investment banks are composed of a corporate finance/ equity capital markets team (CF/ECM), a syndication team, and sales & trading teams (S&T). Because the corporate finance team has access to insider information, a barrier (or "Chinese Wall") exists between it and the S&T department. The CF/ECM team is in direct contact with the issuer on the private information side. Its main missions include advising on structuring and timing, managing the process, overseeing the preparation of documentation, and coordinating input from other advisors. Post-IPO, this team continues to advise on on-going merger and acquisition opportunities, fundraising, and, where relevant, exit options. The syndication team operates above the Chinese Wall, acting as the link between the CF/ECM and S&T Teams. Its members guide interactions between the two parties and handle allocation of information. Their other roles include preparing the roadshow and centralising book building. The sales & trading team is in direct touch with investors and is responsible for selling a variety of financial products. During the IPO process, the sales team is particularly important for the roadshow, where it is in charge of selling the stock to institutional investors. INVESTMENT BANKS: LEAD MANAGER & BANKING SYNDICATE EQUITY RESEARCH ANALYSTS On the public information side, equity research analysts track company performance and changes in stock price. These are sector specialists; they have genuine expertise in specific industries. Their job consists of initiating an analysis of companies and formulating a fair valuation of the business, which, in turn, leads to a target stock price. These assessments are rounded out by recommendations: "buy", "sell" or "hold". Ratings will fluctuate in response to milestones in the company's development and to news affecting its sector. CLOSE-UP % % + 12 A guide to listing on the stock exchange I EURONEXT 13 A guide to listing on the stock exchange I EURONEXT Dublin London Paris Madrid Brussels Amsterdam Frankfurt Munich Zurich Milan Lisbon CONTAC T US Euronex t's tea m of listing speciali sts is happ y to an swer an y quest ions yo ur compan y has re garding listing on one or more of our Eur opean c ash mar kets. www.eu ronext.c om/listi ngs/con tact-us 1,300 issuers ................................ 3.9 trillion market capitalisation* European teams present in 10 countries ................................ 960+ active institutional investors #1 Exchange for tech SMEs in Europe, with 350 tech SMEs listed SMEs ON EQUITY MARKETS MARKETS TAILORED TO MEDIUM-SIZED COMPANIES 955 listed SMEs 258 SME listings since 2013 154,663m aggregate market capitalisation Dedicated service offer designed for SMEs A CUTTING EDGE TRADING PLATFORM Optiq, our multi-market trading platform, provides customers with maximum flexibility, simplified and harmonised messaging as well as high performance and stability. 14 A guide to listing on the stock exchange I EURONEXT 15 A guide to listing on the stock exchange I EURONEXT CHOOSING YOUR COUNTRY AS POINT OF ENTRY When going public on Euronext, companies can choose their point of entry: Belgium, France, Ireland, Portugal, the Netherlands or the United Kingdom. The regulator is that of the jurisdiction selected. Each company can find the market that best suits its profile. markets 17 GUIDE D'INSCRIPTION LA BOURSE I EURONEXTE 2018 CHOOSING YOUR MARKET AND COUNTRY OF LISTING Identifying the best market for your company's size and ambitions Access funding, expand abroad, attract talent, launch new productsEuronext is more than a source of funding. We're a long-term partner for your success. EURONEXT (AMSTERDAM, BRUSSELS, LISBON, LONDON, PARIS): OUR MAIN MARKET Euronext is a regulated market for highly structured companies that have the financial and human resources to meet the requirements of international investors. Its three segments are: compartment A for companies with market capitalisations over 1bn, compartment B for 150m to 1bn, and compartment C for less than 150m. Listing on Euronext is recommended for companies seeking to raise over 30m and gain international exposure. Eligibility: highly visible to media and to both institutional and retail investors; included in the most pretigious indices Liquidity: one of the most liquid markets in Europe, highly visible to investors Main advantage: credibility - highly visible to media and to both institutional and retail investors; included in the most prestigious indices Reporting requirements: EURONEXT GROWTH (BRUSSELS, LISBON, PARIS): LINKING THE REGULATED MARKET AND PRIVATE EQUITY Euronext Growth is ideally suited to small- and mid- sized companies (SMEs) that want to raise funds to finance growth. Listing requirements are simplified and requirements are lighter than for the main market. Intended primarily for midcap companies, Euronext Growth is open to both professional and individual investors. Although a controlled market, it is not regulated as defined by EU directives and thus offers an alternative route for organisations that cannot meet the requirements of a regulated market. In general, Euronext Growth is intended for companies with annual revenue of over 5m looking to raise at least 2.5m. Eligibility: fair amount of listing requirements Liquidity: a large community of long-term investors focusing on SMEs only including both institutional and retail investors are active on this segment Main advantage: governance - grow your business and keep control. Going public also boosts the awareness of your company in your eco-system Reporting requirements: ELIGIBILITY CRITERIA EURONEXT ACCESS EURONEXT ACCESS+ EURONEXT GROWTH EURONEXT Free float Not applicable 1m 2.5m >25% market cap or 5m Financial statements 2 years (if relevant, and no requirement for audited accounts) 2 years incl. audited accounts of the last financial year Audited accounts of the last 2 financial year 3 years (or 2 for SMEs*) Accounting standards IFRS or local GAAP IFRS Intermediary Listing Sponsor Listing Agent Main document to be provided Information document (or EU Prospectus for a public offer >8m) s EU Prospectus MARKET RULES FOR LISTED COMPANIES When an IPO application is submitted, the market operator: Verifies that the application complies with market regulations (next page) Conducts an in-depth examination of the business: Rationale for listing: why is the company applying for an IPO? Does listing make sense? Business model: In-depth analysis of the company's business model and competitive environment Finances: the company's financial datacash flow, income statement, balance sheet and financial projectionsare verified by the operator's admissions team. Risks: what are the main risks facing the company? Compliance: the features of the proposed offer are also reviewed by the operator's compliance department to protect its reputation and ensure the quality of its markets. This compliance review covers the company, key managers, board members, UBOs (ultimate beneficial owners), and other issues. EURONEXT ACCESS (BRUSSELS, LISBON, PARIS): THE FIRST STEP Euronext Access markets are designed especially for start-ups and SMEs that wish to join a stock exchange to finance growth and gain the reputational advantages of listing, but do not meet the criteria for admission to Euronext's regulated markets or Euronext Growth. Because Euronext Access markets are not regulated under the EU Directive, the admission criteria are much simpler and less extensive, unless a prospectus is needed though market abuse and transparency provisions do apply in accordance with applicable law. Once companies are big enough, they are encouraged to consider transferring to Euronext Access+ or Euronext Growth, and later to a Euronext regulated market. Eligibility: low amount of listing requirements Liquidity: lower amount of active investors than on larger markets such as Euronext Growth and Euronext Main advantage: Listing your company on the stock market with simple admission criteria Reporting requirements: EURONEXT ACCESS+ (BRUSSELS, LISBON, PARIS): A SPRINGBOARD TO LISTING FOR START-UPS AND FAST-GROWING SMEs Euronext Access+ is a special compartment of Euronext Access that is tailored to the needs of start-ups and SMEs. Euronext Access+ acts as a springboard to other Euronext markets, helping companies transition smoothly and adapt to market practices. Euronext Access+ has its own listing criteria, and companies admitted to trading on this market enjoy special assistance and greater visibility. EURONEXT EURONEXT ACCESS EURONEXT ACCESS + & EURONEXT GROWTH 817 total number of issuers 215 total number of issuers 223 total number of issuers 294 number of Tech companies (36%) 63 number of Tech companies (29%) 134 number of Tech companies (60%) 266m average deal size at IPO 20k average deal size at IPO 23m average deal size at IPO 1389m average market cap at IPO 57m average market cap at IPO 93m average market cap at IPO Source: Euronext : number of issuers as of 31.08.2018, average data over 5Y (2012-2017) excluding merger operations 16 A guide to listing on the stock exchange I EURONEXT 17 A guide to listing on the stock exchange I EURONEXT A CROSS-SECTION OF IPO CANDIDATES The profiles below illustrate sector and typology analyses of some of the companies that launched IPOs on Euronext markets between 2013 and 2018. They represent an average profile based on financial indicators at the time of listing. A sample of 143 IPOs of SMEs since 2012 across Euronext pan-European markets has been used to build a high- level picture of companies at their time of listing. Data has been compiled from issuers' prospectuses and averages have been computed per category, exception made of the measurement of three-year sales growth, where the median was more relevant. Sectorial categories follow the International Classification Benchmark (except for Tech companies where innovation level was a screening criteria), while the Family-owned category falls in line with Euronext standard definition. Last, the International Expansion category only includes companies that chose the IPO as a means of raising capital to expand their business outside domestic frontiers. TYPICAL IPO CANDIDATES 103 41 38 41% 310 Technology, media and telecoms (TMT) Market cap at IPO (m) Funds raised at IPO (m) Sales at IPO (m) 3Y sales growth prior to IPO # of employees at IPO Retail (B2C) 549 136 636 2398 Market cap at IPO (m) Funds raised at IPO (m) Sales at IPO (m) 3Y sales growth prior to IPO # of employees at IPO 15% Biotech 39 145 60 Market cap at IPO (m) Funds raised at IPO (m) Sales at IPO (m) 3Y sales growth prior to IPO # of employees at IPO 1% 11 Family-owned 61 156 261 Market cap at IPO (m) Funds raised at IPO (m) Sales at IPO (m) 3Y sales growth prior to IPO # of employees at IPO 71% 87 International growth (all sectors and sizes) 101 172 227 Market cap at IPO (m) Funds raised at IPO (m) Sales at IPO (m) 3Y sales growth prior to IPO # of employees at IPO 58% 117 Medtech 29 93 42 Market cap at IPO (m) Funds raised at IPO (m) Sales at IPO (m) 3Y sales growth prior to IPO # of employees at IPO 34% 6 Industrial 73 164 1121 Market cap at IPO (m) Funds raised at IPO (m) Sales at IPO (m) 3Y sales growth prior to IPO # of employees at IPO 12% 263 TO LIST OR NOT TO LIST? Considering an IPO in the next 3 years? Our pre-IPO programmes for growing companies help you decidefor free. TECHSHARE A pan-European programme that helps innovative companies use financial markets to grow. With TechShare, entrepreneurs can decide whether an IPO is the right solution for their development projects. WHO IS IT FOR? Executives only Tech companies (TMT, Digital, Life sciences, Cleantech) with growth ambitions Likely to be interested in capital markets within 2-3 years Sufficient company maturity/development FAMILYSHARE A programme designed to make family businesses aware of financing solutions offered by the stock exchange, and to help them prepare for and navigate the challenging processes of funding, inheritance planning and remaining independent. WHO IS IT FOR? Executives, shareholders and family members Family businesses with growth ambitions that may require access to capital markets for debt or equity issuance (IPO) in the next 2 to 3 years Family-owned companies seeking new ways to stay sustainable, preserve their values, motivate the next generation, increase employee shareholding, attract and retain talent, and more. Learn more about TechShare: tech.euronext.com Learn more about FamilyShare: euronext.com/family-business FROM TECHSHARE/ FAMILYSHARE TO IPO TechShare 2015-16 IPO in February 2017 9.4m raised TechShare 2015-16 IPO in June 2017 39.8m raised TechShare 2015-16 IPO in October 2017 19.6m raised TechShare 2017-18 IPO in April 2018 13.6m raised FamilyShare 2017-18 IPO in June 2018 38.7m raised 18 A guide to listing on the stock exchange I EURONEXT 19 A guide to listing on the stock exchange I EURONEXT 2018 A guide to listing on the stok exchange I EURONEXT PUBLIC COMPANY A NEW CHAPTER Entrepreneurs rightly view stock market listing as a milestone, but it is a beginning, not an end. An IPO marks the start of a new journey: when companies go public, they agree to comply with a full range of regulatory and strategic requirementswith all that this implies. REACHING OUT TO INVESTORS Companies whose market debut attracts institutional and retail investors begin a new existence, where success is shaped by the quality of their relationship with the market. This is because listing is now the core of their financial and growth strategy. An IPO goes well beyond regulatory issues, day-to-day market performance and the capacity to raise more capital. Listing is an asset to be maintained and carefully tended; it is a resource that the company can use to seize new opportunities to grow, either organically or through M&A. KEY FEATURES OF SUCCESSFUL LISTING: Transparency and visibility Regular communications and consistency Investor confidence Effective use of markets FINANCIAL COMMUNICATIONS One of the main differences between private and public companies is the amount of information the latter must provide to the market. From the regulator's point of view, financial information must be accurate, detailed and published in good faith, and it should be released according to an agreed annual calendar. In the meantime, events that are likely to influence investor perceptions of the businessand thus its share price and valuemust be announced immediately and to all investors at the same time. Successful investor relations demand forward planning and attention to detail: Future announcements must be prepared carefully to avoid catching the market off guard The company should develop a global communications strategy that updates the market on key developments outside of regular financial announcements, without going overboard 3 KEY POST-IPO QUESTIONS Is your business in a position to meet both regulatory requirements and shareholder expectations over the long term? How can you use listing as an opportunity to continue transforming your business? How can you manage shareholder expectations while fostering trust and engagement? LIFE AS A 20 A guide to listing on the stock exchange I EURONEXT 21 A guide to listing on the stock exchange I EURONEXT A PARTIAL LIST OF ONGOING OBLIGATIONS FOR LISTED COMPANIES EURONEXT ACCESS EURONEXT ACCESS+ EURONEXT GROWTH EURONEXT Financial reporting: annual Unaudited annual financial statements Annual financial report (audited annual financial statements, business report and auditors' report on the annual financial statements) Annual financial report (annual financial statements, business report and auditors' report on annual financial statements) Annual financial report (audited annual financial statements, business report and auditors' report on annual financial statements) Financial reporting: semi-annual Not required Unaudited semi-annual financial statements and business report Unaudited semi-annual financial statements and business report Semi-annual financial statements, business report and auditor's report on semi-annual financial statements Non-financial reporting: annual Report on corporate governance Report on corporate governance Report on corporate governance Report on corporate governance, report on internal control and declaration of auditor's fees Legal Entity Identifier (LEI) Yes Yes Yes Yes Financial/Investor Website Yes Yes Yes Yes Price-sensitive information & decla- ration of management transactions Applicable Applicable Applicable Applicable Insider lists (internal document) Applicable Applicable Applicable Applicable Intermediary Not required Listing Sponsor Listing Sponsor Not required Availability of preparatory documents for the AGM Yes Yes Yes Yes, on the company's website Disclosure of threshold crossing (capital or voting rights) Not applicable Not applicable Applicable Applicable LIFE AS A PUBLIC COMPANY BEYOND REGULATORY REQUIREMENTS Issuers build trust over time, in part by demonstrating management's willingness to go above and beyond the basic financial information required by regulations. Concretely, management representatives must make themselves available to investors and attend all traditional investor relations meetings. But they should also seize opportunities to interact with investors at other times, articulating clear messages on management's vision and the company's markets and goals. EQUAL TREATMENT OF SHAREHOLDERS: THE BASICS All company shareholdersemployees, individuals and institutionsmust be treated fairly and equitably. All must receive the same content from the same channels, and access to management comments must be the same. The digital revolution makes it easier to respect this basic principle, thanks in particular to: Compulsory use of an approved wire service for "broad, simultaneous and safe" transfer of financial data by all listed companies Access to executives' statements via audio recordings, video recordings and live conferences broadcast over the internet, made available to anyone who is interested STRUCTURED COMMUNICATIONS STRATEGY A fully operational communications plan is essential, not only to promote share trading and liquidity, but also to comply with reporting, transparency and news flow targets. Events that a listed company can use to structure its communications include: Half-yearly and annual meetings for analysts/investors (in France, those are generally organised with SFAF, the French association of financial analysts) Conference calls with analysts when quarterly results are published Annual general meetings of shareholders Investor forums organised by Euronext and brokers Theme days and site tours organised by the company, especially if its business lends itself to this type of interaction Meetings with individual shareholders during dedicated events, including trade fairs, and meetings with investor clubs and associations Roadshows with foreign investors 22 A guide to listing on the stock exchange I EURONEXT 23 A guide to listing on the stock exchange I EURONEXT $ FINANCE STRATEGIC TRANSACTIONS After their IPO, listed companies are free to make additional calls on the market. But their shares can also serve as a virtual currency in strategic mergers and acquisitions. Public Takeover Bids and Public Exchange Offers are built on the quality of fundamentals and an assessment of the value of the initiating party. In most cases, financing of the acquisition or the exchange price will be determined by the parity between the two companies concerned. Here listing on Euronext provides an immediate calculation of company value in the form of the share price, which can serve as a benchmark for structuring the deal. MARKET FOLLOW-ONS Listing on Euronext gives companies virtually unlimited access to capital, provided they comply with the rules for trust and compliance set out above. Having made its market debut, a listed company can raise capital and do strategic deals far more easily because listing opens doors. This is the payoff for a successful listingone that provides solid, compelling information and attracts enthusiastic investors. NEW CALLS ON THE MARKET When companies return to the market to raise additional funds, they are generally looking to finance growth, e.g.: Fresh funding for essential R&D Opening to new markets / countries Acquisitions Additional rounds of funding can be used to: Strengthen the company's capital base Achieve a better balance of equity and debt Offer partners or shareholders an opportunity to raise their stake in the company Fund employee shareholding plans There are two ways to raise capital: through a public placement or a private placement. With a private placement, the issuer can finalise the transaction quickly by limiting the shares on offerunder certain conditionsto a predetermined group of qualified institutional investors. By contrast, a public offer will reach the largest possible number of investors but requires the regulator's approval of the prospectus and greater investment in time and marketing. When their financial profile and business fundamentals are aligned, companies can also issue bondslisted or notto raise debt and round out equity. Some hybrid products combine debt and equity. This is the case of convertible bonds, a common means of raising funds; such issues are easier when an underlying product is listed on the stock market. THE EQUITY STORYKEY TO A RELATIONSHIP BUILT ON TRUST From the very start of the listing process, company leaders must define their goals for the next three to five years, their shareholder strategy, and their financing requirements. These three pillars will determine their key messages to markets, defining the language they use, their business model, and their aims and aspirations. What the company needs is a clear and compelling equity storythe narrative that managers will use to present it to investors. This is the basis for all interaction; as such, it will be challenged, adjusted and adapted for each financial meeting. The ultimate aim is to build a stock market "brand" with appeal for investors. This brand becomes a key asset throughout the co
Your Cheif Investment Officer for raising Series A investment in the UK
An IPO (Initial Public Offering) is the most common way to list a company’s shares on the stock market. Concretely, it takes the form of a capital increase or sale of shares currently held by investors. By offering new or existing shares for sale, the company opens its capital to new investors, both institutional and retail.
Tech Investment and Growth Advisory for Series A in the UK, operating in £150k to £5m investment market, working with #SaaS #FinTech #HealthTech #MarketPlaces and #PropTech companies.