When Companies are close to being ready to launch their IPO they will submit a listing application to the stock exchange, and publish an “Intention To Float” or, for the AIM Market, an “AIM Schedule 1” announcement informing of their plans. Typically, such announcements will provide a summary of the business, an overview of the offer, the board of directors, a financial summary, and the key professional parties involved with the listing.
Following this, for the main market a Prospectus will be published, whilst for AIM listings a Pathfinder might be published to gauge appetite and demand, followed subsequently by an Admission Document. Companies will often undertake an Investor Roadshow, undertaking presentations to institutional investors and brokers in the City.
Once the demand has been established, a share price will be set, at which point, for AIM Market IPOs, a Schedule 1 Update will be submitted, often known as a ten day notice, being published ten business days ahead of the shares commencing trading.
Once the allocation of stock has been finalized, the execution of your application will take place, with payment being taken and your shares issued, with unconditional full trading commencing within a week.
Not all IPOs are made available to private investors. If a Company believes it can raise the necessary funding it requires through institutional investors, then it may opt not to make the offer available to private investors.
If, however, a Company decides it would like private retail participation in its IPO then intermediaries, such as Direct Market Touch, will be invited to participate.
How Does Direct Market Touch Decide To Participate In An IPO?
Initially our analysts undertake thorough due diligence on the proposition, and if it passes our strict criteria, and we believe investors will achieve an attractive return, then we will invite you to participate in the IPO.
Clearly, with listed Companies, you can view an archive of historic announcements, how a share price has performed, and you have a greater level of transparency in terms of its entire performance. The same cannot be said of unlisted Companies coming to market through an IPO, which is why thorough due diligence is crucial in order to identify IPO opportunities that meet the criteria of delivering a return.
Investors should be aware of the potential for greater volatility with IPOs and new issues as it may take time for a stock to stabilize following listing.
Where Can I View New And Recent Issues?
To view New Issues on the London Stock Exchange Website click here
What Is Stagging?
Stagging is the practice of buying shares in the IPO at the offer price, and subsequently selling them immediately, or shortly after they commence trading. Investors will look to stag when they believe an offer is underpriced, or where there is sufficient demand that the shares will rise in early trading upon listing.