At what stage do Venture Capital firms and Private Equity Groups need to influence a Public Listing on a Stock Exchange
The reality is that with the increase of mergers and acquisitions and private equity markets rebounding, the only absence in the current market has been IPOs and Listings increasing. The reality is the slow recovery in 2010 is going to spur a series of IPOs and Listings on Stock Exchanges within the last quarter of 2010 and first quarter of 2011.
The question is while Private Equity firms review their transactions and the investments that were made in 2008 being likely worth half the investment they put into the projects, the equity market were definitely hit into the Bear end of the Bull Market, but this can change with IPOs.
The reality is much of the investments made were made with viable economic data and asset backed decisions. Thus, from a long-term potential perspective, with additional financing of assets within the companies and liquidity of the assets or company shares, the Private Equity Firms and VCs are capable of gaining back the up to 30%+ returns they are use to when they outperform the markets.
This can typically be done by:
- Building a listed company or buying a listed company and merging some or all of the assets of the public company into the company they have acquired or built, performing the next rounds of financing on a post public basis
- Merging some or all of the assets into a public vehicle for shares that are more liquid than their current position and would return their investment to normality if not to a fair gain on their initial investment through the sale of shares in the market
- The company itself files for a listing on the stock exchange of which it leverages the listing to attract a block trade buyout of the Venture Capital firm. Often the pre-requisite of this financial endeavour is to ensure that your firm has an option agreement with the venture capital firm prior to going public as to what price you can buy the shares back at.
Often the time is right to go public when the firm is prepared and requires capital to advance the project, but has good financial gains and is healthy to list. This is often the time to push for a healthy IPO and exit strategy, however this is not always the case. Often the companies are not capable of running the business with all of the assets within them, as often is, the entrepreneurs running the companies have spread themselves thin with too many assets and projects, divisions and potential. The best step at this stage is to influence moving the expense of some of these assets and opportunities into a newly listed public vehicle that can carry the cost of the project but still show healthy gains in the share price back to the parent company that the Venture Capital company owns a percentage of. Often it is best for the VC firm to co-ordinate the listing and or reverse merger into a public company to ensure M&A fees and shares in the process, solidifying and enforcing their ability to get the capital invested back with a good return. In some cases, these struggling firms could already be publicly listed on markets such as the JSE, TSX, NASDAQ OTC, or ASX markets, in some cases they even could have been delisted from those markets. In these instances listing a new primary listing on the Frankfurt Stock Exchange or spinning the assets out into Frankfurt breath a second life of hope for VC firms into the situation.
The Frankfurt Stock Exchange is by far the most affordable and fastest market to list on in Europe and globally, whereby the unregulated market can take 3-6 weeks to list a company’s assets or build a public company.
Frankfurt Stock Exchange Listings are best handled by an Agency who can co-ordinate the key aspects of listing on the exchange, such as:
- Initial due diligence
- Prepare and coordinate drafting of a Company securities prospectus/expose for admission to the Frankfurt Stock Exchange for IPO
- Liaising with company management for all due diligence documentation required in respect of the IPO listing
- Preparation of all other documents required for admission to trading and commencement of trading on the Frankfurt Stock Exchange
- Appoint and work with Share Registrar of Company to have shares registered
- Activate electronic share registration system with Share Registrar and share clearing system in Germany
- Joint presentation of the application for the listing of new shares for IPO by Company
- Liaison with Frankfurt Stock Exchange
- Drafting and coordinating publication of any mandatory announcements
- Application for the start of trading on the Frankfurt Stock Exchange for the Company’s IPO.
- Assist in transfer of shares via CREST/CLEARSTREAM into the electronic trading system.
Services include the cost of the Sponsor, Listing, Filings, Incorporation, and documentation preparation.
There is only one full-service firm in the Frankfurt Stock Exchange that we know of that completes the co-ordination of these tasks called FSE Listings Inc. (http://www.fselistings.com)
Many firms try to co-ordinate this process on their own; however, most Sponsors, Banks, and Agencies in Europe do not deal with a lot of international listing clients, while this is the specialty of FSE Listings Inc, with representation around the World.
The companies that list on the Frankfurt Stock Exchange are often listed with attractive market capitalization and for a Venture Capital firm or Private Equity fund, it is easier to show an immediate return in value for their investment. Through the services of an Agency, liquidity can also be a major component of the service contract that leads to the exit strategy of investors who require returning funds to the market before they have to deal with the effects of Clawbacks from a few recession years.
Venture Capital firms are often best to build vehicles with the intent of buying assets or listing their companies directly on the Frankfurt Stock Exchange. It is possible to build publicly listed Capital Companies, Special Purpose vehicles, and similar companies on the unregulated market within the Frankfurt Stock Exchange because the main component of the requirements is the paid-in capital requirement and the Business Plan Expose, which is much more condensed than a prospectus or even a short-form prospectus. Therefore, it takes only 3-6 weeks to list a company on the Frankfurt Stock Exchange using a full service consultancy such as FSE Listings Inc.
FSE Listings Inc is an ideal partner for the Venture Capital and Private Equity Marketplace for getting companies listed on a stock exchange.
Contact FSE Listings Today
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