Public Listing / IPO

GOING PUBLIC
MADE EASY

What is ‘Going Public’?

Going public refers to a private company’s Initial Public Offering (IPO) or Direct Public Offering (DPO), thus becoming a publicly-traded and owned entity. Businesses usually go public to raise capital in hopes of expanding.

What is Initial Public Offering (IPO)?

The first time securities of a privately owned company are offered for sale to general public.

What is Direct Public Offering (DPO)?

A direct public offering (DPO) is a type of offering in which a company offers its securities directly to the public to raise capital. An issuing company using a DPO eliminates the intermediaries—investment banks, broker-dealers, and underwriters—that are typical in initial public offerings (IPO), and self-underwrites its securities.

Cutting out the intermediaries from a public offering substantially lowers the cost of capital of a DPO. Therefore, a DPO is attractive to small companies and companies with an established and loyal client base. A DPO is also known as direct placement.

CAPITAL.MY IPO advisory provides turnkey solutions ranging from pre-IPO placement, arrangement and appointment of professionals, liaising with authorities, up to post-IPO investor relations. Over the years, we have established a trusted network of capital market professionals and advisors to provide a seamless solution to emerging companies looking to go public either via Direct Public Offering (DPO) or Initial Public Offering (IPO) across the globe.

Listing Requirements

3 Phases of an IPO / DPO

Groundwork

Ideally start groundwork at least 24-36 months in advance. Initial stages of groundwork including:

1. Identify a Stock Exchange to list;

2. Objective assessment of the company’s ability to meet its listing requirements;

3. Organizational structure i.e. bringing all relevant business entities under a single listing vehicle;

4. Assembling a dedicated team with relevant experience in finance, risk management and internal controls.

Listing Preparation

1. Financial, commercial and legal due diligence to ensure that statements in prospectus & IPO documentation can be substantiated thereby mitigating legal & regulatory risks arising out of misstatements.

2. Business plan preparation to support growth and expansion plans.

3. Development of the equity story to make shares attractive in the market- debt/equity ratio, EBIDTA growth, profitability.

4. Valuation to support pricing.

5. Audit/review of financial accounts for a) Asset valuation impairment b) Revenue recognition c) Consolidated subsidiary financial statements d) Related-party transactions.

Listing Execution

Step 1: Select an investment bank
The first step in the IPO process is for the issuing company to choose an investment bank to advise the company on its IPO and to provide underwriting services. The investment bank is selected according to the following criteria:
Reputation; The quality of research; Industry expertise; Distribution, i.e., if the investment bank can provide the issued securities to more institutional investors or to more individual investors and Prior relationship with the investment bank.

Step 2: Due diligence and regulatory filings.

Step 3: Pricing. Factors affect the offering price including the success/failure of the roadshows (book building process) and condition of the market economy.

Step 4: Allocate Shares to Investors

Step 5: Start Trading

How CAPITAL can help

Our IPO services include private placements prior to IPO, choice of stock exchange and introductions to vast network of broker-dealers, market makers, underwriters and investment banking firms.

We act as your trusted expert advisor in all aspects of pre and post-IPO planning, support and execution.

Pre-IPO

Pre-IPO Assessment – including business plan, valuation, quantitative and qualitative test, highlight all compliance issue and recommend solutions.

Identify a suitable market to list, for example Bursa Malaysia Ace Market, Singapore SGX Catalist, Hong Kong GEM, Australia NSX / ASX, London AIM, US OTC Market , Nasdaq – best for the client’s industry and file for initial public offerings to general market or via placement.

Pre-IPO Fund Raising to fund the listing expenses and working capital to increase the company’s bottom line, hence it’s share offering price.

Private Placement. We introduce our clients to our vast network of investment funding sources, venture capital, private equities, institutional funds, investment bankers and licensed broker-dealers.

IPO / Public Listing

Assemble and lead the IPO Team;

Structuring the IPO process, timeline and business organisation;

Manage the due diligence;

Work with the investment bankers / broker-dealers on roadshows and fund raising activities;

Working with the professionals to produce and lodge the prospectus;

Assists in Investor briefings and roadshows.

Post-IPO

Plan and prepare investor relations programs

Advise on post-IPO activities

Metrics for judging a successful IPO process

The following metrics are used for judging the performance of an IPO:

Market Capitalization

The IPO is considered to be successful if the company’s market capitalization is equal to or greater than the market capitalization of industry competitors within 30 days of the initial public offering. Otherwise, the performance of the IPO is in question.

*Market Capitalization = Stock Price x Total Number of Company’s Outstanding Shares

Market Pricing

The IPO is considered to be successful if the difference between the offering price and the market capitalization of the issuing company 30 days after the IPO is less than 20%. Otherwise, the performance of the IPO is in question.