LPC Law Notes > Public Companies and Equity Finance Notes
This is an extract of our The Offer And Application Process document, which we sell as part of our Public Companies and Equity Finance Notes collection written by the top tier of Cambridge And Oxilp And College Of Law students.
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2. The offer and application process a.
Methods of offer: offer for subscription, offer for sale and placing
There are two main types: retail and institutional offerings
Cost
Timing
Retail More expensive as must appoint
Institutional Shares offerd through IB
receiving bank to deal with share
and broker directly to
applications. Also more advertising
investors
required which adds to cost More marketing required and share
Fewer investors usually
application requests to be
identified prior to Launch
processed, so generally takes Shareholder
longer Results in larger shareholder base
Liquidity
Lower liquidity as shares held in hands of fewer SH
Retail Offers
*
Includes two elements: offer for subscription (in which new shares are sold to public) and offer for sale (in which existing shares sold). Often both are used in same floatation.
Offer for subscription: "...subscribe for securities not yet in issue.." A. Company issues new shares as way of raising capital for company B. Shares offered to public in IPO: Investors subscribe for shares; and C. Company appoints receiving bank to accept applications from public and eal with payment for shares Offer for Sale: "...purchase securities of issuer already in issue or allotted..."
* Offer of existing shares. Sold to public in IPO by selling shareholders. Does not raise any new capital for company. Selling shareholder appoints bank to accept applications and receive payment
Institutional Offers
Placing: "...marketing of securities already in issue but not listed..."
* Both new and existing shares can be offered by company and selling shareholders.
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