Oxbridge Notes | The Offer And Application Process

2. The offer and application process

Methods of offer: offer for subscription, offer for sale and placing

There are two main types: retail and institutional offerings

	Retail	Institutional
Cost	More expensive as must appoint receiving bank to deal with share applications. Also more advertising required which adds to cost	Shares offerd through IB and broker directly to investors
Timing	More marketing required and share application requests to be processed, so generally takes longer	Fewer investors usually identified prior to Launch
Shareholder Liquidity	Results in larger shareholder base	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. Shares offered to “placees” (clients of sponser, broker, or IB) rather than public. Not usually necessary to appoint receiving bank as there are fewer places than subscribes in an IPO. Investment bank deals with proceeds of issue.
Documentation
Placing letter sent to places detailing terms of offer. Placees sign return
Placing agreement: is between sponsor and company to place shares
Bookbuilding: IB running book of interest in shares from interested investors.
Intermediaries:
Similar to placing but shares can be marketed only to firms who are intermediaries as defined in FCA Handbook.

When a prospectus is required

Prospectus

Also used to market issue to investors. Must contain all relevant info an investor would require in order to make an informed decision as to whether to invest in shares. It is required either by s. 85(1) FSMA or s. 85(2) FSMA and with no relevant exemptions applying.

Format of prospectus

PR 2.1.1-2.1.7	The Summary
PR 2.2.1	Can be single doc or separate doc
PR 2.2.2 PR 2.2.3	If separate, must divide the info into reg doc, sec note, and summary Reg doc + sec note + summary = valid prospectus
PR 2.2.4	If already have a reg doc approved by FCA must only draw up sec note and summary on admission to trading (see PR 5.1.4: Reg doc valid 12 months so long as updated) and be aware of PR 2.2.5

PR 2.2.6	When requesting admission, can choose to file reg doc without approval. If do so, entire documentation including updated info, is subject to approval.
PR 2.2.10	Format of the prospectus, both if single document or separate documents.

Contents of prospectus – specific and general disclosure obligations

s. 87A FSMA and PR 2.1.1	General Obligation of disclosure
Articles 3 – 6 and 21 PD Reg Annexes I-III and XVIII as set out in PR App 3.1	How to determine specific disc obligations
Art 24 PD as set out in PR 2.1.4 and Annex XXII of PD REg as set out in PR 3.1	Contents of Summary (use Annex XVIII as PRs not correctly shaded)
PR 2.1.7R	Summary must also...

Articles 3 – 6 and 21 PD Reg

Annexes I-III and XVIII as set out in PR App 3.1

How to determine specific disc obligations

Art 24 PD as set out in PR 2.1.4 and Annex XXII of PD REg as set out in PR 3.1

Contents of Summary (use Annex XVIII as PRs not correctly shaded)

PR 2.1.7R

Summary must also...

The Offer And Application Process - Public Companies and Equity Finance

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