Glossary
A fundraising in which existing shareholders are offered new shares in proportion to their holdings, usually at a discount to the market price.
Equity Capital Markets
from Capital Markets
An initial public offering (IPO) is the process by which a private company lists its shares on a stock exchange for the first time. The company appoints underwriters (investment banks) who commit to buying any unsold shares, guaranteeing the fundraise. A detailed prospectus must be prepared and approved by the FCA, disclosing the company's business, financials, risks, and management. The bookbuilding process gauges investor demand at various price points before the final offer price is set. Beyond IPOs, listed companies may raise additional equity through rights issues (offering existing shareholders new shares pro rata) or placings (selling new shares to institutional investors).
IPO (Initial Public Offering)
The first sale of a company's shares to the public, marking its transition from a private to a publicly listed entity.
Prospectus
A legal document disclosing all material information about the issuer and the offering, required for public offers of securities.
Underwriting
The commitment by an investment bank to purchase all or part of a securities offering, guaranteeing the issuer raises its target funds.
Bookbuilding
The process of gauging investor demand at different price levels to determine the final offer price of an IPO or bond.
Coupon
The periodic interest payment made to a bondholder, expressed as an annual percentage of the bond's face value.
Covenant
A binding promise in a bond's terms restricting the issuer's conduct (e.g., caps on additional debt) to protect investors.
Free Float
The proportion of a listed company's shares that are available for public trading, excluding shares held by insiders or strategic investors.
Yield
The annual return an investor earns on a bond, accounting for its coupon payments and the price paid for it.