The process of conducting an Initial Public Offering (IPO) in London

The process of conducting an Initial Public Offering (IPO) in London involves several steps and requires careful planning and coordination with various stakeholders. Here is an overview of the typical process for a London IPO:

Preparing for the IPO: The company seeking to go public in London needs to evaluate its readiness for an IPO and assess whether it meets the listing requirements of the London Stock Exchange (LSE) or the Alternative Investment Market (AIM). This involves engaging advisors such as investment banks, legal counsel, and accountants to assist with the IPO process.

Selecting Advisors: The company appoints various advisors to guide it through the IPO process. These advisors typically include investment banks (as bookrunners and underwriters), lawyers, auditors, and public relations firms. They provide expertise and assist in preparing the necessary documentation and meeting regulatory requirements.

Conducting Due Diligence: The company undergoes a thorough due diligence process, which involves reviewing its financial records, operations, legal contracts, intellectual property, and other aspects of the business. This helps identify any potential issues or risks that need to be addressed before going public.

Drafting the Prospectus: The prospectus is a legal document that provides detailed information about the company to potential investors. It includes financial statements, business description, risk factors, management team, and other relevant information. The company works with its advisors to draft the prospectus in compliance with the regulatory requirements of the LSE or AIM.

Valuation and Pricing: The company, in collaboration with its advisors, determines the valuation of the company and the offer price of its shares. This involves analyzing comparable companies, market conditions, and investor demand to arrive at an appropriate valuation and pricing strategy.

Investor Roadshow and Marketing: The company and its advisors embark on an investor roadshow to market the IPO to potential investors. This involves presenting the investment case and the growth prospects of the company to institutional investors, fund managers, and other key market participants. The goal is to generate interest and secure commitments from potential investors.

Filing the IPO Documents: Once the prospectus is finalized, the company files the necessary documents with the relevant regulatory authorities, such as the Financial Conduct Authority (FCA), for approval. This includes submitting the prospectus, financial statements, and other required disclosures.

Bookbuilding and Allocation: The investment bank acting as the bookrunner conducts a bookbuilding process, where it collects indications of interest from potential investors and determines the demand for the shares. Based on this demand, the bookrunner and the company allocate shares to investors.

Pricing and Listing: Once the bookbuilding process is complete, the offer price is determined, and the shares are priced. The company and its advisors announce the final offer price, and the shares are listed on the London Stock Exchange or AIM.

Trading and Post-IPO Compliance: After the IPO, the company's shares start trading on the stock exchange. The company must comply with ongoing reporting and disclosure requirements, including regular financial reporting, investor relations activities, and corporate governance practices.

The number of IPOs (Initial Public Offerings) in London can vary from year to year depending on market conditions, economic factors, and investor sentiment.

Historically, London has been one of the leading global IPO markets, attracting companies from various sectors and geographies. In recent years, the number of IPOs in London has shown both fluctuations and resilience. For example, in 2019, there were around 45 IPOs on the Main Market of the London Stock Exchange (LSE) and the AIM market, raising significant amounts of capital. However, the COVID-19 pandemic and associated uncertainties had an impact on IPO activity in 2020, leading to a decrease in the number of IPOs globally, including in London.

It's worth noting that the IPO market can be influenced by external factors, such as economic conditions, market volatility, and regulatory changes. For instance, changes in investor sentiment, geopolitical events, or regulatory shifts can impact the appetite for new listings. Additionally, market conditions and industry trends can also affect the number of IPOs in a given year.

To stay up to date with the latest IPO activity in London, it is recommended to refer to industry reports, financial news outlets, and resources specific to the London Stock Exchange or other relevant financial market authorities. These sources can provide insights into the number of IPOs, capital raised, and trends in the London IPO market.

The duration of an Initial Public Offering (IPO) in London can vary depending on various factors, including the complexity of the business, regulatory requirements, market conditions, and the readiness of the company. While there is no fixed timeline, a typical London IPO process can range from several months to over a year. Here is a general timeline highlighting the major steps involved:

Preparation and Planning: This stage involves assessing the company's readiness for an IPO, selecting advisors, conducting due diligence, and preparing the necessary documentation. It can take several months to prepare the financial statements, draft the prospectus, and complete the due diligence process.

Regulatory Approval and Filing: Once the prospectus is finalized, the company files the necessary documents with the relevant regulatory authorities, such as the Financial Conduct Authority (FCA). This step can take a few weeks to several months, depending on the regulatory review process and any potential queries or clarifications required.

Investor Roadshow and Marketing: The company and its advisors embark on an investor roadshow to market the IPO to potential investors. This stage typically lasts a few weeks, during which the company presents its investment case and growth prospects to institutional investors and fund managers.

Bookbuilding and Allocation: The bookbuilding process involves collecting indications of interest from potential investors and determining the demand for the shares. This stage can last a few weeks and involves working with the bookrunner to finalize the offer price and allocate shares to investors.

Pricing, Listing, and Trading: Once the bookbuilding process is complete, the offer price is determined, and the shares are priced. The final offer price is announced, and the shares are listed on the London Stock Exchange or AIM. Trading of the shares typically begins shortly after the listing.

Overall, the entire IPO process from start to finish can take anywhere from several months to over a year, depending on the specific circumstances. It is crucial to note that this timeline is indicative and can be influenced by various factors, such as market conditions, regulatory requirements, and the complexity of the company's operations. Engaging experienced advisors and working closely with them can help streamline the process and navigate potential challenges along the way.

It's important to note that the specific process and requirements may vary depending on the nature of the business, the regulatory framework, and the listing requirements of the London Stock Exchange or AIM. Engaging experienced advisors is crucial to navigate the complexities of the IPO process and ensure compliance with regulatory obligations.

FD Capital are a leading recruiter of CFOs and FDs for UK companies both for the AIM market and for a full listing.   Exec Capital specialise in C-Suite Recruitment.