Initial Public Offerings

This programme is designed to enable participants to become proficient in their understanding of the IPO process. It covers a broad spectrum of topics which are designed to ensure that participants are equipped with the financial skills-set necessary to understand how IPOs are arranged, managed, priced and distributed. The course features: Strategic considerations; flotation or sell The due diligence process Corporate restructuring steps pre-IPO Selecting the right exchange for the floatation IPO valuation Multiple based valuation methodologies Accounting scams Marketing the IPO IPO underwriting IPO issues Investor strategies in an IPO Secondary offerings New developments in IPO business Who Should Attend: The course provides participants with a working knowledge of the principles and practices of the launch of companies on an exchange by means of IPO. It ensures that participants acquire a sufficiently thorough understanding of the subject. The course should appeal to executives and managers; professionals in all functions; investment and commercial bankers; equity and fixed income investment managers; investment and analysts; credit analysts and credit controllers; treasury managers and staff; lawyers and newly-qualified accountants; company brokers and advisers.
Day 1 IPO Preparation and Planning The decision to float Why float? Exit strategies for existing shareholders Strategic considerations: float or sell? Evaluating the alternatives: the advantages and disadvantages Pre-conditions to a flotation: not all companies are suitable Selecting the market: AgBank dual listing Selecting financial advisers Investment bank conflicts Case study: US IPO failure The due diligence process The objective of the due diligence exercise The long form report Legal due diligence Investigation of the suitability of directors Evaluating the competitive position Accounting policies and window dressing Case study: Due diligence issues Restructuring and prospectus issues Essential corporate restructuring steps pre-IPO Selecting the appropriate capital structure Organising the issuer to provide the resources Timetable considerations Prospectus responsibility – whose? Listing requirements – selecting the right exchange for the flotation Senior versus junior market (Main board v GEM) Case study: Review of senior and junior markets IPO documentation Documents needed Detailed timetable content for HK Lock-up agreements American depositary receipts (ADRs and Global DRs) Prospectus responsibility – whose? Exercise: Review of key documentation: Rusal IPO Day 2 IPO Valuation and Marketing IPO valuation Capital structure and its impact on value Weighted average cost of capital (WACC) Valuation using WACC Capital asset pricing model (CAPM) Case study: Computation of cost of equity, cost of debt, WACC, regearing beta Using WACC Preparing cash flows The forecast and terminal value periods Calculating cost of equity Calculating WACC Selecting beta Case study: Computing WACC and adjusting for differences in gearing IPO valuation based on WACC Growth rates in the terminal value period Common mistakes in WACC Forecasting reinvestment Return on invested capital Pre-IPO research: Orange Telecom Case study: Spin off valuation using WACC Multiple based valuation methodologies The price earnings ratio (PER) Valuation using PER Comparable company analysis Theoretical background Strengths and weaknesses Alternative multiples Ratios based on earnings before interest and tax (EBIT) Case study: IPO valuation using PERs and EBIT ratios: AZ, Asian chemicals company listing in London Day 3 Marketing and Underwriting the IPO Valuation of special case companies Valuation of companies with sales but no profits Valuation of companies with no sales Valuation of mining companies Valuation of property companies IPO bubbles Exercise: Participants value a series of non-standard IPOs Marketing the IPO Book-building/placing as an issue method Offers for sale as an issue method Introductions The role of the analyst Roadshows and company visits Preparing the management Case study: The overallotment option/Greenshoe IPO Underwriting Hard and soft underwriting The financial risk in underwriting Underwriting as an option Competition issues in fees charged Underwriting in public offers Case study: Review of the underwriting risk in a book-built issue: IPO abuses in the TMT boom In-house financial analysis Third party research Bidding or indicating interest Aftermarket orders – a possible abuse Other abusive practices covered in the Global Settlement Case study: Recent developments in IPOs: the Open IPO and competitive tender Course summary and close