Company creates new shares to issue, often called a seasoned offer.
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Non-dilutive secondary offer
The company directors or founders release some of their own, already issued equity to the public.
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Offer for subscription
Company issuing shares directly to the public
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Offer for sale
Similar to offer for subscription but an issuing house is used to initially buy the new shares before re-selling them to the investing community.
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Offer for sale by tender
Issuing house invites investors to tender bids for the company's shares
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Accelerated Book building
Investment firm canvasses existing clients about their interest in shares- so build a book of interested parties. The term 'accelerated' refers to it being short-term.
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Placing
Issuing house does not resell shares the investing community, but only offered to selected large wealthy investors. Type of selective marketing.
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Intermediaries Offer
Making a placing through several brokers which widens the investor base.
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Equity crowdfunding
Often used by start-ups that are not quoted on secondary market. Company attracts equity directly from the public through a crowd funding hub.
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Introduction
Does not raise new capital for a company but can be used to create a platform for future capital raising activities. Listing on exchange without issuing new share capital.
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Rights issue
Invitation to shareholders to buy new shares in a company in proportion to their existing holding of shares. The rights issues are offered at a discount.
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Theoretical Ex-Rights Price (TERP)
the Price of a share after the rights issue
e.g. 5 shares 8.50 - 8.50/5 = TERP
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Theoretical Nil paid price
TERP - Subscription price
sub price = the new discounted price of the rights issue
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Scrip issue/ bonus issue/ capitalisation issue
Method of issuing new shares to existing shareholders free of charge. No new capital is raised for the company. Dilutes the existing share price of the company to make it more marketable to investors.
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Theoretical Ex-scrip price
The price of the share after the bonus issue.
Same as TERP
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Stock splits and consolidations
Share split is where issues are split into a greater number, each with a smaller nominal value.
Consolidations is when the shares are merged to create a higher nominal value.
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Underwriting
guaranteeing a minimum level of proceeds from a share issue. The cost of the guarantee is a fee.
If insufficient, the underwriter agrees to take up any shortfall, paying cash for unwanted stock
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Share buy back
Not a method of issue.
Purchase by issuing company of its own shares. Can choose to hold them as 'treasury shares'
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Reasons for share buy backs
An 'undervalued' signal to shareholders, alternative to dividends, deploy surplus cash that could be utilised elsewhere, to rationalise capital structure.
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Other cards in this set
Card 2
Front
The company directors or founders release some of their own, already issued equity to the public.
Back
Non-dilutive secondary offer
Card 3
Front
Company issuing shares directly to the public
Back
Card 4
Front
Similar to offer for subscription but an issuing house is used to initially buy the new shares before re-selling them to the investing community.
Back
Card 5
Front
Issuing house invites investors to tender bids for the company's shares
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