Initial Public Offering
The Decision to Go Public
Going public is a strategic decision that can bring significant advantages to your company and provide long term solutions to flexible capital-raising and organizational development. Companies which go public, have the ability to stay ahead of the competition through the development of sound business strategies which are backed by solid financial plans, particularly if you are a family business this step can ensure long term sustainability of your family-owned business for generations to come.
Download DFM’s latest guides to gain valuable insight and practical advice on the Initial Public Offering (IPO) process and Investor Relations (IR) including:
- The "DFM IPO Guide to Going Public" which highlights the benefits of taking private companies to the public arena, including case studies of selected listed companies.
- The “DFM Guide to Investor Relations” which provides practical support for companies on Investor Relations by examining best practices and key principles to consider when developing an Investor Relations strategy.
Benefits to Going Public
Once the decision to go public has been finalized, there are three key stages of an IPO that a company must go through. The timing and details of these steps depends on the level of the company's readiness at that point of time, hence it is advisable that companies commission a Readiness Assessment with an external IPO corporate advisor.
- An ideal company for a potential IPO is one which is already acting as a public company prior to embarking upon its journey to go public. If this is not initiated in advance, start by institutionalizing the organization with a structure supported by a solid decision-making framework and formal procedures in place. Externally build on a positive public image with strong corporate communication messages.
Set a clear mission to transform the business from a private to public company and focus on employee engagement would be a great idea to start with! Some key steps to consider include:
- Commit and dedicate your time as the company owner for the IPO planning.
- Assign an IPO project manager supported by a strong management team.
- Engage DFM, regulators and advisors early in the process.
- Assess the company's readiness based on existing reporting systems, internal controls and processes.
- Review the current Articles Of Association (AOA) and manage legal and shareholding matters, if any.
- Add new founding members before going public, if required.
- Appoint independent Non-Executive members to your Board, if required.
- Select an official Lead Advisor after exploring various proposals.
- Set an IPO target deadline and avoid disclosing until the next stage of the IPO.
- Important Tip: Save time and effort by obtaining an initial approval from the Regulator by submitting a letter of intention to go public, a company profile and business strategy, along with the last two years' financial reports.
- This is the most critical step for a successful IPO transaction and requires a project management matrix which includes all parties related to the implementation.
In addition to filing the IPO documentation to the regulator, as well as the valuation and price discovery process, you should be working on the equity story and attracting investors. For this you will need an Investor Relations Manager, a CFO and a strong internal or external corporate communications team to communicate regularly and consistently with key market audiences including investors, financial media, analysts and regulators. Below are some major steps you will need to undertake:
- Advisors prepare a feasibility study and a due diligence and asset valuation report.
- Agree the pricing methodology for share valuation (fixed price or book-building).
- Advisors will draft a prospectus with supporting documents.
- Finalize AOA, contracts and other legal or financial documentation required.
- Shareholder declarations required for regulators.
- SCA will provide the initial acceptance letter to carry out the IPO.
- Price discovery process and roadshow for investors for book building strategy
- Subscription period, allocations and refunds are managed.
- First General Assembly Meeting takes place.
- PJSC status published in the official Gazette and registered with SCA.
- DFM listing application submitted and commence trading.
- Important tip: There are IPO documentation templates including a prospectus template available on the SCA website for the IPO application. Furthermore, DFM offers an eIPO platform for swift online IPO subscriptions.
- Most importantly once the company has gone public, it must focus on regular market updates as per the disclosure rules and maintain regular communications with investors, analysts, and the financial media through a well-established Investor Relations unit.
The main areas to focus on as a listed company are as follows:
- Meeting regulatory reporting and disclosure requirements.
- Investor Relations function and practices as stated in our IR guide.
- Corporate communications and management of announcements and financial media.
- Annual General Meetings and corporate actions. DFM Financial Services can manage this for you.
- Maintain visibility amongst investors and brokers.
- Important Tip: DFM offers a wide range of issuer services that support your investor communication efforts including eFSAH, eSAR and XBRL. See DFM Issuer Services.