Flotations/Initial Public Offerings

This chapter begins by describing the rationale behind flotations. An overview of the offering process is followed by more detailed discussions of the legal and documentary requirements and the process of marketing, syndication and sales. Flotation is the initial sale of a company's shares to the public and the listing of the shares on a stock exchange. Flotations are also called Initial Public Offerings (IPOs). The process of flotation is long and arduous, involves significant time commitments from the company's management and advisors (investment bankers, stock brokers and solicitors amongst others) and is not cheap. Flotation is often seen as the final step in the financial development of a company. On establishment, it is the savings of their founders that typically finances companies. To spread risk, it is common for the lead bank to ‘sub underwrite’ among a group of banks, brokers and investing institutions in order to spread the risk of failure.