Executing a successful listing - PwC UK - Building relationships, … · 2017-11-15 · IPO Journey...

Executing a successful listingLondon

www.pwc.co.uk/capitalmarkets

About this brochure

This brochure summarises the different London markets, the listing standards for each market, the process and the timeline for going public in London and an overview of the wider regulatory environment.

Content

London, an overview 2

London Stock Exchange markets 5

Listing requirements and continuing obligations 6

Corporate governance 8

Market indices 9

IPO Journey 10

How PwC can help you 12

Capital Markets contacts in London 14

2 Executing a successful listing – London PwC

London, an overview

Countries with companies traded on the London Stock Exchange

40 +

20 – 40

1 – 19

Number of companies listed

EU RegulatedMarkets

ExchangeRegulated Markets

Securities not admitted to O�cial List

Professional Securities Market AIM

Main Market

Securities admitted to O�cial List(maintained by UKLA)

Main Market

London remains one of the most influential global financial centres. It owes much of its continuing appeal to its cosmopolitan status, the liquidity of the financial markets and the regulatory, business and political framework that supports those markets.

• The London Stock Exchange (LSE) is one of the world's oldest exchanges and offers a wide choice of routes to market, for UKand international companies. Which market a company should consider will depend upon different criteria including the:

– stage of the company’s development;

– complexity of the offer and securities issued;

– investors who are being targeted;

– size of the company;

– overall strategy and objectives; and

– eligibility.

Source: LSE data as at 30 June 2016

PwC Executing a successful listing – London 3

*As at 30 June 2016 Main Market AIM

Number of companies 1,236 1,013

Number of international companies 270 184

Total market capitalisation (GBP bn) 3,993 72

Data source: London Stock Exchange data

Spread of companies by market capitalisation as at 30 June 2016 (in GBPm)

0

50

100

150

200

250

Over 2,0001,000-2,000500-1,000250-500100-25050-10025-5010-255-102-50-2

1318

135

24

44

71

90

122

193

156

44

16

3 2

150

102

215

109

158

118

197

88

Main Market AIM


Financial Healthcare

Basic materialsIndustrials

Oil and gas Telecommunications

Consumer goods Technology

Consumer services Utilities

25%

15%

15%

15%

5%

4%

8%

7%

3% 2%

Market capitalisation of London listed companies by industry as at 30 June 2016


London offers a wide choice of markets to companies of all sizes and origins


Main MarketThe Main Market is the LSE's flagship market, regulated by the UK Listing Authority (UKLA), a division of the Financial Conduct Authority (FCA).

A company has a choice of segments on which to list on the Main Market. The Premium segment and the Standard segment are the FCA listing categories that have been designed to help clarify the regulatory standards that apply to a listing on the Main Market. A company may also apply for admission to the High Growth Segment (HGS) or the Specialist Fund Segment (SFS).

Premium listing Standard listing (Shares and Depositary Receipts)

High Growth Segment

Specialist Fund Segment

Only available to equity shares and closed-and open-ended investment entities.

Issuers with a Premium listing are required to meet the UK’s Listing Rules which are more onerous than the EU minimum requirements.

A company with a Premium listing is expected to meet the UK’s highest standards of regulation and corporate governance.

Standard listings cover the issuance of shares, Global Depositary Receipts (GDRs), debt and securitised derivatives and are required to comply with EU minimum requirements.

A Standard listing allows issuers to access the Main Market by meeting EU harmonised standards only, rather than the additional UK listing requirements.

The HGS is designed for entrepreneurial companies with high growth potential that need funds to achieve the expansion they desire and are also ready for a public listing.

It is a stepping stone to a Premium Listing in the future.

The segment allows companies incorporated in the EEA to raise funds with a minimum 10% free float.

The SFS (formerly the Specialist Fund Market) is a segment of London's EU regulated market and is for specialist investment funds and specialist property funds targeting sophisticated investors. Types of fund can include private equity funds, hedge funds, feeder funds (both single and multi-strategy), specialist geographical funds, funds with sophisticated structures or security types.

AIMAIM is the LSE’s market for smaller, growing companies. The market has a simplified regulatory environment which has been specifically designed for the needs of small and emerging companies.

AIM is an exchange regulated market. Companies wishing to join AIM must comply with the LSE AIM Rules for Companies.

Companies applying to AIM must appoint and retain a Nominated Adviser (Nomad) to guide them through the admission process and to advise them subsequently as a public company. The Nomad must be registered with the LSE (See the LSE website for a list of approved Nomads).

The AIM Rules for Companies set out the requirements and guidance for companies quoted or wishing to be quoted on AIM. The admission document requirements are based on the FCA’s Prospectus Rules with certain (optional) exclusions. Admission documents relating to a public offer in the UK will need to follow the FCA’s Prospectus Rules and require the approval of the FCA.

Certain tax incentives are available to individual and corporate investors, which enhance the attractiveness of investing in AIM companies

Professional Securities Market (PSM)The PSM is a specialist exchange regulated market designed to suit the specific needs of companies looking to raise capital through the issue of specialist debt securities or depositary receipts (DRs) to professional investors. Listing on this market may avoid the need for financial information to be converted to IFRS or an equivalent GAAP.

London Stock Exchange markets

• Premium, Standard and HGS equities are traded on the LSE’s SETStrading platform.

• Standard listed depositary receipts are traded on the LSE InternationalOrder Book (IOB) platform.

6 E

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Ad

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pec

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Corporate governance

Companies with a Premium listing in the UK are required under the Listing Rules to apply the principles of the UK Corporate Governance Code and comply with its provisions or explain how they achieved good governance by other means. Companies with a High Growth Segment or Standard listing can choose to comply with their domestic corporate governance code. Companies will also be subject to the Disclosure and Transparency Rules (DTRs) in relation to disclosure of inside information and major shareholder notifications.

The UK Corporate Governance Code is best practice for AIM companies but there are no specific requirements. The UK Quoted Companies Alliance has issued corporate governance guidelines for smaller quoted companies.

Summary of the key areas of the UK Corporate Governance Code

UK Corporate Governance CodeBoard of Directors • The company should be headed by an effective board, whose responsibilities are separate from the day to day running of

the business.

• At least half the board (excluding the Chairman) should comprise independent non-executive directors (INEDs).

• For smaller companies (below FTSE 350) only two INEDS are required to be on the board.

Senior independent director • One independent non-executive director should be appointed as senior independent director to provide a sounding board for the Chairman and intermediary for the other directors.

Chairman • The role of the Chairman and chief executive should not be exercised by the same individual. The chairman should be independent on appointment.

Audit committee • An audit committee of at least three, or in the case of smaller companies two, independent non-executive directors should be set up.

• At least one member must have competence in accounting and/or auditing.

Nomination and Remuneration committee

• Nomination and remuneration committees should be set up – with a majority of members being independent non-executive directors.

• In FTSE 350 companies, an externally facilitated board evaluation should be carried out every three years.

Remuneration • A significant portion of executive directors’ remuneration should be structured so as to link rewards to corporate-performance. Performance-related elements should be transparent, stretching and rigorously applied.

• No director should be involved in deciding his or her own remuneration.

Accountability • The board should present a fair, balanced and understandable assessment of the company’s position and prospects.

• The board should ensure the company maintains a sound system of risk management and internal control.

Relations with shareholders • The Board is responsible for ensuring that a satisfactory dialogue with shareholders takes place.

• The board should use general meetings to communicate with investors and to encourage their participation.


Market indices FTSE seriesInclusion in the FTSE UK Index Series is determined by the FTSE committee. The FTSE UK Index Series is open to eligible Premium Listed Main Market companies. Non-UK incorporated Premium Listings need to have more than 50% free float to be eligible for FTSE UK series index inclusion. Companies with a Standard Listing are not eligible for inclusion in the FTSE UK Index Series.

FTSE 250The FTSE 250 Index is comprised of mid-sized companies. This index is designed to measure the performance of the mid-cap segments in the UK market which fall just below the FTSE 100 Index in size and liquidity.

FTSE 100The FTSE 100 Index is one of the world's most recognised indicies. It represents the performance of the 100 largest UK-domiciled blue chip compaines which meet FTSE's size and liquidity screening. The index is currently used as the basis for a wealth of financial products available on the LSE and globally.

FTSE Small Cap The FTSE Small Cap consists of companies outside the FTSE 100 and FTSE 250 indices.

FTSE All-Share The FTSE All-Share Index represents the performance of all eligible companies listed on the Main Market. It is considered to be the best performance measure of the overall London equity market, with the vast majority of money invested in funds benchmarked against it. The FTSE All-Share Index is the aggregation of the FTSE 100, FTSE 250 and FTSE Small Cap Indices.

FTSE Russia IOB (FTSE RIOB)The FTSE Russia IOB is comprised of the fifteen largest Russian Depositary Receipts (DRs) listed on the LSE’s International Order Book (IOB).

AIM indicesTrading in AIM is supported through the AIM index series, which includes the:

• FTSE AIM 50 UK Index;

• FTSE AIM 100 Index;

• FTSE AIM All-Share Index; and,

• FTSE AIM All-Share Supersector Index.

Each index has specific eligibility criteria relating to general liquidity and free float requirements.


IPO Journey

Ongoing

Pre IPO

Strategy

1–2 years

Planning and preparation

6–12 months

Execution

2–6 months

Completion

0–2 months Life as a PLC

Post IPO

Identify roadmap

to IPO

Define anddevelop the strategy and equity story

Appointadvisers

Early look marketing

Financial information and

track record requirements

Review of systems and control environment

Assess corporate

governance,compliance,

boardcomposition

andcommittees

Dealstructure and

valuation

Employee &management compensation and incentive

plans

Duediligence

Preparation ofanalyst presentation

and roadshowpresentation

Kick off meeting

Exit strategy

Communicationsstrategy

Active IPO execution and

prospectus drafting

Pricing and allocation

Marketing

InvestorRelations

Transparencyand corporate

governance

Newsflow

Project management, business as usual

Tax and legal structuring

Keymanagement

Refine business plan, strategy and equity story

Continuingobligations

Shareprice

Review of business plan, financing and

growth prospects

By defining the different preparation stages, the IPO journey tool will help you anticipate the IPO process. It is available at www.pwc.co.uk/capitalmarkets


Ongoing

Pre IPO

Strategy

1–2 years

Planning and preparation

6–12 months

Execution

2–6 months

Completion

0–2 months Life as a PLC

Post IPO

Identify roadmap

to IPO

Define anddevelop the strategy and equity story

Appointadvisers

Early look marketing

Financial information and

track record requirements

Review of systems and control environment

Assess corporate

governance,compliance,

boardcomposition

andcommittees

Dealstructure and

valuation

Employee &management compensation and incentive

plans

Duediligence

Preparation ofanalyst presentation

and roadshowpresentation

Kick off meeting

Exit strategy

Communicationsstrategy

Active IPO execution and

prospectus drafting

Pricing and allocation

Marketing

InvestorRelations

Transparencyand corporate

governance

Newsflow

Project management, business as usual

Tax and legal structuring

Keymanagement

Refine business plan, strategy and equity story

Continuingobligations

Shareprice

Review of business plan, financing and

growth prospects


How PwC can help you

Executing a successful IPO is typically the culmination of a complex process, whatever market you list on. From strategy, accounting, reporting, financial systems, governance, media and investor relations, to treasury and financial risk management, legal, tax, HR, technology – every piece of the puzzle must be in place, and connected before you proceed.

Planning and good preparation are crucial to a successful IPO, regardless of the market or stock exchange. PwC’s dedicated team of capital markets professionals are here to help and make the task at hand an easier experience for you.

We have deep experience and knowledge of the rules and regulations governing all major capital markets—and a successful history of working on both international and domestic IPOs.

www.pwc.co.uk/capitalmarketsThis publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

© 2016 PricewaterhouseCoopers LLP. All rights reserved. In this document, "PwC" refers to the UK member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

161107-150254-CB-OS

Mark Hughes

T: +44 (0)20 7804 3824E: [email protected]

Capital Markets contacts in London

Philip Tew


Kevin Desmond


James Anderson


Clifford Tompsett


Ross Hunter


Ursula Newton


Richard Weaver


Peter Whelan


Lucy Tarleton


Executing a successful listing - PwC UK - Building relationships, … · 2017-11-15 · IPO Journey...

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