Photo : D.R.
The reasons for an initial public offering (IPO) can vary: obtaining new financial
resources to pursue the company’s development, ability to finance acquisitions
(including through exchange of stock), a search for capital liquidity for existing shareholders, the wish to raise the company’s profile and credibility, or the chance to link employees to the evolution of the company’s performance (with the attribution of free shares or stock-options).
The Crédit du Nord offers companies who want to raise capital on the stock markets a comprehensive offer that includes advice to the company and its shareholders as well as placement of the company’s stock with investors, via its brokerage firm, Gilbert Dupont. “The Crédit du Nord intervenes in the initiation and structuring phases of the operation, and the brokerage firm Gilbert Dupont in placement with investors,” explains Franck Imbert, Crédit du Nord’s market operations Manager.
In practical terms, the Market Operations Department performs the following tasks: planning the financial strategy, structuring the operation, the writing and registration of the prospectus with the market authorities, management of the project and supervision of the regulatory aspects. The latter activity covers the coordination of the various participants (brokerage firm, auditors, lawyer and communications agency), the preparation of the documentation relating to the operation, due diligences, the relationships with the market authorities (AMF, Euronext), communications and post-IPO follow-up (as part of its role as “listing sponsor” for a listing on Alternext).
“We are amongst the leading players on the French small and mid-caps market (market capitalization less than 1 billion euros),” says a delighted Franck Imbert. “With 145 average stocks monitored, almost 60 organisation contracts and more than ten companies under listing sponsor contract, the Crédit du Nord Group is undoubtedly the biggest on the Paris market in this segment.”
Euronext’s Compartment B (regulated market) concerns companies whose market capitalization is between 150 million and 1 billion euros, and Compartment C those whose capitalization is lower than 150 million euros. There is no size criteria on Alternext (regulated market), but fewer restrictions in terms of corporate governance and financial information make it a perfectly adapted tool for small and mid-caps. “Alternext was founded in May 2005 for SMEs,” says Franck Imbert. “This market, like the other stock markets, experienced its first crisis in 2007-2008, but few business failures were noted. It is a guarantee of quality and credibility for investors, whose confidence in Alternext is growing.”
It is an analysis that incites Franck Imbert to face 2010 with confidence. “Since the crisis in the Summer of 2007, initial public offerings have been virtually inexistent; only five public offer operations in 2008 and one in 2009. But on the other hand, the market has welcomed the many operations of increase in capital; firstly, those of the big companies and banks in the first half of 2009, then those of the small and mid-caps in the second half. This really does show that investors are once again ready to invest in SMEs listed on the Stock Exchange. In the first half of 2010, we should therefore see around ten initial public offerings.”
How are stock prices determined?
Today, most initial public offerings are made through an open price offer (OPO), with a range of prices whose maximum variation is 20%. “In practical terms, we carry out a theoretical assessment of the company with the help of evaluation methods commonly used in this type of operation,” explains Franck Imbert. “Then depending on market conditions and tests carried out amongst a selection of investors, we determine the price range within which the investors will place their orders.”
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