Our Corporate Finance, Legal and Secondary Markets Expert Group contributed to our response to the FCA consultation on the availability of information in the UK Equity IPO Process.
We commented that it is in principle a cause for concern that in most cases a draft prospectus is not available until at least two weeks after the intention to float and a final prospectus is only available after pricing. The current approach in the typical UK IPO timetable leads to the prospectus (or admission document for AIM companies) being published at the end of the marketing and fundraising process, rather than at the beginning, when it is required.
While we did not have concerns about connected research, we noted that, with the current approach, connected research serves an essential role in price formation for an IPO, by including prospective financial information and valuation opinion and analysis.
Although we generally supported the outlined high level aims for reform of the UK IPO process, we considered that they may be more appropriate for larger IPOs than for smaller ones. We argued that none of the three models proposed in the Discussion Paper would achieve the desired outcomes, particularly in relation to small and mid-size quoted companies, such as AIM companies.
We outlined an alternative model for consideration. We noted that the UK IPO process can only be enhanced if the need for chronological barriers between the prospectus and the connected research are reduced or even eliminated altogether.
Regarding blackout periods, we noted that it could be helpful if, as a matter of regulation, the blackout period could be reduced from the current 14 days to seven days.