Euromoney Audit Training

Course overview

It is important for bankers, investment managers, company executives, managers and professionals in all corporate functions and in organisations servicing corporates to have a current understanding of the financial issues that affect the process of launching an IPO.

'IPOs: Managing, Underwriting and Pricing' training course will enable you to fully understand the IPO process. It covers a broad spectrum of topics which are designed to ensure that you are equipped with the financial skills-set necessary to understand how IPOs are arranged, managed, priced and distributed.

Summary of course content

• How companies are selected for IPO
• How companies are restructured to meet listing requirements
• The timetable and essential due diligence procedures preliminary to IPO
• How to value companies for IPO
• How companies are marketed to investors
• Bookbuilding - the essential issue process
• How IPOs are underwritten
• The different techniques available for secondary offerings
• What corporate governance issues are important in presenting a company
• The aftermarket
• The role of the analyst
• The impact of new regulations (post the Global Settlement) on IPO processes

Methodology

The course is interactive and participants will be fully involved through discussion, exercises and
case studies.

Computer-Based Exercises

Delegates should bring a laptop with Microsoft Excel for some of the exercises and case studies. A calculator would also be useful.

Who should attend this training course?

• Corporate executives from companies’ planning an IPO
• Investment and commercial bankers
• Equity and fixed income investment managers
• Investment and equity analysts
• Credit analysts and credit controllers
• Treasury managers
• Lawyers
• Accountants
• Company brokers and advisers
• Private Equity 

Supporting publication

 

DAY ONE: IPO preparation and planning

The decision to float

• Why float?
• Exit strategies for existing shareholders
• Strategic considerations: float or sell?
• Evaluating the alternatives: the advantages and disadvantages
• Pre-conditions to a flotation: not all companies are suitable
• Selecting the market: AgBank dual listing
• Selecting financial advisers
• Investment bank conflicts

Case study: Lock&Lock (Korean company) considering obtaining a HK listing

The due diligence process

• The objective of the due diligence exercise
• The long form report
• Legal due diligence
• Investigation of the suitability of directors
• Evaluating the competitive position
• Accounting policies and window dressing

Case study: Due diligence issues

Restructuring and prospectus issues

• Essential corporate restructuring steps pre-IPO
• Selecting the appropriate capital structure
• Organising the issuer to provide the resources
• Timetable considerations
• Prospectus responsibility - whose?
• Listing requirements - selecting the right exchange for the flotation
• Senior vs. junior market (Main board vs. GEM)

Case study: Review of the two main HK markets

IPO documentation

• Documents needed
• Detailed timetable content for HK
• Lock-up agreements
• American depositary receipts (ADRs and Global DRs)
• Prospectus responsibility - whose?

Exercise: Review of key documentation: Rusal HK IPO

DAY TWO: IPO valuation and marketing IPO valuation

• Capital structure and its impact on value
• Weighted average cost of capital (WACC)
• Valuation using WACC
• Capital asset pricing model (CAPM)

Case study: Computation of cost of equity, cost of debt, WACC, regearing beta

Using WACC

• Preparing cash flows
• The forecast and terminal value periods
• Calculating cost of equity
• Calculating WACC
• Selecting beta

Case study: Computing WACC and adjusting for differences in gearing

IPO valuation based on WACC

• Growth rates in the terminal value period
• Common mistakes in WACC
• Forecasting reinvestment
• Return on invested capital
• Pre-IPO research: Sands China IPO

Case study: Spin off valuation using WACC

Multiple based valuation methodologies

• The price earnings ratio (PER)
• Valuation using PER
• Comparable company analysis
• Theoretical background
• Strengths and weaknesses
• Alternative multiples
• Ratios based on earnings before interest and tax (EBIT)

Case study: IPO valuation using PERs and EBIT ratios: AZ, Asian chemicals company listing in London

DAY THREE: Marketing and underwriting the IPO

Valuation of special case companies

• Valuation of companies with sales but no profits
• Valuation of companies with no sales
• Valuation of mining companies
• Valuation of property companies
• IPO bubbles

Exercise: Participants value a series of non-standard IPOs Marketing the IPO

• Book-building/placing as an issue method
• Offers for sale as an issue method
• Introductions
• The role of the analyst
• Roadshows and company visits
• Preparing the management

Case study: Alibaba and the overallotment option/Greenshoe IPO underwriting

• Hard and soft underwriting
• The financial risk in underwriting
• Underwriting as an option
• Competition issues in fees charged
• Underwriting in public offers

Case study: Review of the underwriting risk in a bookbuilt issue: AIA IPO

IPO abuses in the TMT (Telecom Media Technology) boom

• In-house financial analysis
• Third party research
• Bidding or indicating interest
• Aftermarket orders - a possible abuse
• Other abusive practices covered in the Global Settlement

Case study: Participants examine abuses in the TMT boom

DAY FOUR: Post IPO issues New developments in IPOs and other issue mechanisms

• Competitive underwriting - the London experience
• Beating the cartel: the Open system
• Accelerated IPOs - an exit for private equity and other vendors
• Special purpose investment vehicles (SPACs)
• Listing by reverse takeover
• Spin-offs and demergers

Case study: Participants analyse the terms of sample offerings using these new techniques

Secondary offerings

• Pre-emption rights
• Underwriting
• Deeply discounted issues
• Timetable
• Other secondary offerings
• Accelerated book building: VTB

Russian privatisation case

• Pricing
• Fees and recent regulatory attention

Case study: Participants analyse the rights issues of major international companies

Using shares for acquisitions

• Computing the effects on financial statements
• Impact of financing methodology
• Bridging as an important financing option
• PER of cash/debt
• Assessing the effect of synergies

Case study: Participants analyse the financing options for a major acquisition

Post issue shareholder relations

• Market abuse rules
• Profit warnings
• Investor relations
• Managing analysts' expectations
• Investor objectives, investor types, hedge funds and long-only investors

Case study: Review of some problem areas for companies post issue

Specific Asian companies covered in the course include:

• Rusal
• AIA
• Alibaba
• Lock&Lock
• VTB
• Sands China
• AgBank

• Paul Richards

  Paul Richards graduated from Cambridge University in mathematics and has a Masters degree in business administration from London Business School. He is also a CFA charter holder, an Associate of the Chartered Institute of Bankers, a Member of the Association of Corporate Treasurers and a Fellow of UKSIP.
  
  Paul has more than 20 years investment banking experience specialising in domestic and international corporate finance at UBS (Warburg), HSBC and Map Securities (part of Skandia Insurance and Mapfre, Spain). He was also the chief executive of the London merchant banking operation of Credit Industriel et Commercial, a major French banking group.
  
  As a result of this experience, Paul has extensive first hand experience of: Mergers and acquisitions; IPOs; bond issues; secondary market issues; privatisation; debt syndications; corporate treasury; equity valuation; investment analysis; security and derivative valuation; private equity; modelling; corporate governance; and compliance. 
  
  Paul won the 2004 Wincott Foundation Prize for his article "Lessons in shareholder value" on the boom and bust in new economy stocks, published in Professional Investor (the journal of the UK Society of Investment Professionals - the UK member society of the CFA Institute). He has taught MBAs and Masters to Finance students at Cass and Cranfield Business Schools for more than 12 years in a range of financial disciplines; and has trained staff at major City houses and in banks on different continents.

  Courses run by this instructor

  • Valuing Mining Companies
  • Structured Mezzanine and Equity Finance

Interested in holding this course in-house? Please fill out your details and a member of our team will be in touch with more information.

Private Equity and Leveraged Transactions

18-20 Jun 2012 (Singapore, Singapore)
10-12 Dec 2012 (Hong Kong, Hong Kong)

This course reviews critical aspects of private equity and includes the analysis of several private equity deals and leveraged buyouts, including a series of Asian transactions.

Financial Modelling for Mergers and Acquisitions

5-8 Nov 2012 (Hong Kong, Hong Kong)

A hands-on course that offers practical instruction on how to model economic, financial and strategic issues associated with M&A.

Corporate Valuations - Techniques and Modelling

18-22 Jun 2012 (Singapore, Singapore)
3-7 Dec 2012 (Hong Kong, Hong Kong)

A practical guide to provide you with a complete understanding of the various efficient corporate valuation techniques

Valuation Modelling and Analysis: DCF, Earnings Multiples and LBO Models

10-13 Jul 2012 (Singapore, Singapore)

Using a number of intensive hands-on exercises and case studies, you will gain practical skills at modelling and interpretation of valuation analysis.

Valuing Mining Companies

10-12 Sep 2012 (Hong Kong, Hong Kong)

A 3 day course that will provide you with a thorough understanding of the major techniques to value mining companies

Financial Modelling in Excel

10-12 Sep 2012 (Hong Kong, Hong Kong)

The principal aim of 'Financial Modelling in Excel' is to enable you to use Microsoft Excel to prepare logical and easy-to-use financial models to support transactions, forecasts and planning for ongoing business needs.

Mergers & Acquisitions: Winning Strategies – Identifying Opportunities and Structuring Deals

15-19 Oct 2012 (Singapore, Singapore)

This course looks at the challenging environment of Mergers & Acquisitions and the factors that shape this corporate landscape.

Structured Mezzanine and Equity Finance

5-7 Sep 2012 (Hong Kong, Hong Kong)

Structured Mezzanine and Equity Finance aims to provide participants with exposure to leveraged and mezzanine financing techniques in the context of M&A and private equity structures.

Advanced Company Valuation and Financial Modelling

8-12 Oct 2012 (Singapore, Singapore)

This highly practical course will lead you quickly from the basics through to the more advanced company valuation methodologies and modelling techniques

Asia Corporate Governance

17-19 Sep 2012 (Singapore, Singapore)

This course examines the challenges and practical approaches of implementing effective corporate governance in different company structures with an Asian perspective.

Corporate Social Responsibility (CSR)

20-21 Sep 2012 (Singapore, Singapore)