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SCH’s broking relationships with companies and individuals across the City of London enable us to provide our clients with access to IPOs and placings which are not available to all market investors.
Our team has access to the widest range of IPOs and placings, from companies looking to list on the AIM and ISDX markets, to larger companies who target listings in the FTSE ALL-Share, FTSE 250 and FTSE 100.
Many of these opportunities are institutional only. SCH Advisors enables our clients to take advantage of placings at the same price as large financial institutions. Furthermore, companies raising funds through an equity placement often do so at a discount to the market price via their sponsoring broker, which means our clients are given access to potentially discounted investments.
SCH provide an excellent service for clients wishing to invest in IPOs and placings which are not generally available through the large retail client stock brokers. The terms and discounts available are generally the same as those offered to institutional investors, furthermore the AIM quoted investment opportunities often qualify or EIS tax reliefs. I have participated in over 20 such IPOs and placings through SCH over the last 18 months, nearly all of which have qualified for EIS tax breaks which has allowed me to claim £1,000’s in income tax rebates. SCH’s charges are transparent and the dealing team at SCH are courteous and knowledgeable offering a bespoke service to meet a client’s individual needs. Mr. Ken – Private Client
Here is a helpful glossary of terms for investors interested in IPOs;
Aftermarket – All trading activity in an IPO subsequent to the new issue offering.
Allocation – A specific amount of stock in a new issue that is given to the client from the offering.[⁄bsg_toggle]
Book of Demand – A list of indications of interest for a new issue offering submitted by Institutional and Intermediaries and collated by the lead underwriter.[⁄bsg_toggle]
Cancellation – When an IPO has difficulty getting investor interest to raise the desired capital, the company issuing the shares may cancel the offering in favour of some other form of financing.
Closing Price – A stock’s last transaction price for the day.
Co-Manager – Underwriters that appear on the cover of a prospectus and help the lead manager with the distribution of the offering, but do not make the final decisions.[⁄bsg_toggle]
Effective Date – The day a newly registered share can be offered for sale.
Exchange – The physical location where brokers transact business for their clients. The principal one is the London Stock Exchange (LSE). Each exchange has different requirements as to which companies can trade.[⁄bsg_toggle]
Final Prospectus – The last prospectus to be printed which is after the deal has been officially priced and issued to the public. It contains the final information required, including exact shares issued, at what price, fees charged amongst others.[⁄bsg_toggle]
Gross Spread – The difference between the offering price and the net proceeds given to the company. Those fees include such items as selling concession (where the brokers get their commissions from), manager’s fees, underwriting fees, re-allowance.[⁄bsg_toggle]
IPO – Initial Public Offering
The first time a company offers it shares to the public. This can also apply to a company that was previously public but went private through a buy-out. If the company decides to once again come public, it is still considered an IPO.
The price at which a new stock will be sold to the public and Institutions in the IPO.[⁄bsg_toggle]
The underwriter who, among other things, is in charge of organising the syndicate, distributing member participation shares and making stabilising transactions. The lead underwriter will appear on the left side of a prospectus cover.
The time period after an IPO when insiders at the newly public company are restricted by the lead underwriter from selling their shares in the secondary market.[⁄bsg_toggle]
A simple form of calculating the value of a company based on the amount of shares outstanding times the price of the stock. The outstanding shares include those issued to the public (float) and insiders (restricted).[⁄bsg_toggle]
A stock publicly offered for sale for the first time.[⁄bsg_toggle]
The first day a stock is publicly offered for sale.
The price for which a new stock issue will be sold to the public and institutions.
This is the price range at which the company expects to sell its stock in a public offering.
The number of shares that have been issued by the company which are held by the [insiders] and the general investing public.
A situation where investors have expressed an interest in buying more shares of a new stock than will be available. Under this condition, the price of the stock has a greater likelihood of opening higher than the offering price.[⁄bsg_toggle]
Preliminary or Pathfinder Prospectus
This is a document sometimes printed by the issuer containing a description of the business, discussion of strategy, presentation of historical financial statements, explanation of recent financial results, management and their backgrounds and ownership.
If the opening price of an IPO in the secondary market is higher than its offering price, the difference would be the premium.
The tentative minimum and maximum prices within which the IPO will probably be priced. This can be subject to upward and downward revisions as deemed necessary by both the underwriter and the issuer.
A company document to provide prospective buyers of newly issued stocks to complete the process of full disclosure.[⁄bsg_toggle]
Considerations that are disclosed in the Prospectus that might materially affect the company’s financials, stock price, or reputation in a negative way.[⁄bsg_toggle]
The date that shares must be paid for.
Any person who owns shares of a company’s stock.[⁄bsg_toggle]
This is a brokerage firm that raises money for companies using public equity and debt markets. Underwriters are financial intermediaries that buy stock or bonds from an issuer and then sell these stocks to the public. The process through which this is accomplished is highly regulated by the London Stock Exchange.
Use of Proceeds
How the company plans to use the monies it generated from an IPO or secondary offering.[⁄bsg_toggle]
The initial measure of what a company expecting to come public is worth, used for consideration of whether the company is fairly valued. Depending on market conditions, this value can be revised up or down by changing the expected price range for the IPO.[⁄bsg_toggle]
When a company decides to not continue with its proposed stock offering. The reasons for this can be numerous and don’t always signify problems with the proposed offering. This term is sometimes used with the word ‘cancellation’.[⁄bsg_toggle]