You will need to discuss the different methods of going public with your advisers. There are three principal ways to come to market, ranging from an 'introduction’ to the market – where no new money is raised – to the ‘initial public offering’ (IPO), where institutions and private individuals are invited to subscribe. A halfway house is a ‘placing’ in which shares are offered for sale on a selective basis, primarily to institutional investors.
Your choice will depend on the nature of your business and its capital requirements.
In an introduction, a company joins our markets without raising any capital. In general, a company can do this if over 25 per cent of its shares are already in public hands and there is a fair spread of shareholders. An introduction involves no underwriting fees and little requirement for advertising. However, the opportunities for boosting your company’s profile and visibility are limited.
A placing usually involves offering your company’s shares to a selected base of institutional investors. This allows you to raise capital with lower costs and greater freedom and it gives your company more discretion to choose its investors. The result, however, is a narrower shareholder base, and as such there may be lower liquidity in the shares once your company has been admitted to market.
Initial public offering
In an initial public offering (IPO), your adviser offers your company’s shares to private and/or institutional investors and usually arranges for the offer to be underwritten. An IPO attracts private investors who are important in increasing the liquidity of a company’s shares. It is normally the most expensive route to market, often used by larger companies or those looking to raise substantial amounts of capital.