The key to publicly listing a company is having a long-term vision and strategy which smooths out short-term volatility and delivers value to shareholders over the longer term. For businesses seeking to launch an IPO, here is a five-point checklist to help you achieve that goal as you embark on the path to becoming a listed company:
1. Plan ahead
The IPO process will be one of the biggest changes to any business, and it needs to be very carefully planned. This will include planning for the establishment of appropriate internal processes and procedures, particularly on auditing of the accounts, through to the operating structure of the business. Before approaching the relevant regulatory authority for your plans to IPO, your company needs to be as compliant as possible as a prospective public company.
2. Controlled disclosure of information
Before a formal announcement is made to communicate the company’s intention to list, ensure communications are controlled, well-timed and adhere to market regulations. Through media and presentation training, spokespeople need to be briefed and coached on what they can and cannot say from the beginning of the IPO process.
3. Establish a “normal and customary” flow of communications
As a private entity, it is never too early to open communication channels with key participants in your chosen capital market and to begin building a strong public image. This would include communicating both the organisational changes you have made to the business in order for it to grow, and the progress the business is making towards its objectives. Once advisers are appointed and the IPO application is filed with the relevant capital market authorities, your external communications will be highly regulated and legally binding not only to the company but also, in some cases, with directors of the company being personally liable over what is stated publicly. Ideally, regular PR outreach should start at least one year before the filing date.
4. Think, act and perform like a public company
A robust public image cannot be achieved overnight. Implementation of the communications campaign should effectively build your profile with investors and with those who will influence the investment decision such as financial media, industry publications and financial analysts. If you are communicating in a language that investors already understand, this will speed up the process of educating prospective investors on your company’s investment case. Public companies need to adhere to good governance procedures, with the correct balance of executives and non-executives on the board, transparent financials and a clearly communicated growth strategy. The more protection provided to the investors, the more attractive the investment proposition will be and the higher the subsequent rating.
5. Profile the expertise of the management team
The investment community wants to know whether the management team has the right experience and capabilities to take the company to its next stage of growth. This will show investors that the company is well governed and likely to demonstrate sustainable returns and the building of shareholder value. The corporate communications campaign should demonstrate the strength in depth of the business, as well as best practices on governance to ensure that shareholders are represented appropriately on the board.
Nowhere is this more relevant than in the case of a greenfield IPO, which is the listing of a start-up with no assets or operations. For example, the founders of Marka are some of the best-known business figures in the UAE, which led to a high-profile listing on the Dubai Financial Market and an IPO that was 36 times oversubscribed. Dubai Parks and Resorts is another example of high-profile greenfield IPOs that listed last year and was oversubscribed multiple times.
A strong public profile and open communication will help the market better understand and subsequently build confidence in senior management’s ability to deliver future growth. The more investors trust you, the more likely they are to buy and hold your shares – a classic communication principle about the importance of building trust which also applies to investment decisions.
Bobby Morse, based in London, is a co-founder at H+K Financial. Anca Cighi, based in Dubai, is senior consultant at H+K Financial.
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