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CMS LSE AIM IPO Presentation to Irokotv 2019


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Based on our direct conversations with stockbrokers, NOMADs, auditors and lawyers, an LSE AIM listed company valued at $100m would need to have (ultra conservatively) $8–10m in revenue and $0–1m in EBITDA.

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CMS LSE AIM IPO Presentation to Irokotv 2019

  1. 1. IROKO - The IPO Process October 2019
  2. 2. Outline Which market? Why list? AIM IPO timeline Preparing for listing Q&A
  3. 3. Which market? AIM: - The LSE’s “junior market” - Launched in 1995 to meet needs of smaller growth companies which might not meet the full criteria for the Main Market - Lighter eligibility requirements at IPO and on an ongoing basis - Subject to the AIM Rules Main Market: - Principal market in London - Premium v standard segment - Eligible for inclusion in FTSE Index Series (premium listing only) - Subject to the Listing Rules
  4. 4. Why list? Advantages: - Raises profile - Provides market place for shares - Easier access to capital markets - Acquisition currency - Opportunity for management to partially exit - Attractive for employees - Provides comfort for suppliers, customers and investors Disadvantages: - Public scrutiny - Potential loss of control - Subject to market conditions - Onerous disclosure and reporting obligations - Increased costs and fees - Impact on management time - Additional director responsibilities
  5. 5. AIM IPO timeline – Phase I 4 months prior to admission 3 months prior to admission 2 months prior to admission Kick-off • Kick-off meeting • Agree engagement letters with advisers • Early look marketing • Prepare data room • Finalise pre-IPO reorganisation structure • Discuss board composition and corporate governance structure • Legal and financial due diligence begins • Skeleton admission document available Due diligence reports circulated • Draft legal due diligence report and financial long form report available • Reporting accountants begin working capital report and FPPP report • Submit early notification to AIM • Nomad conducts site visits and completes director due diligence • Continue drafting the admission document Verification begins • Draft investor presentation available • Verification exercise begins • Draft connected analyst research available • Draft placing agreement and other key documents available
  6. 6. AIM IPO timeline – Phase II 5-6 weeks prior to admission 2 weeks prior to admission Admission Research • Connected analyst research published • Attend analyst meetings (investor education), if required • Finalise terms of new share option scheme Marketing • Complete all due diligence and reports • Placing agreement and other key documents in agreed form • Finalise pathfinder version of the admission document • Board meeting to approve the pathfinder and start of investor roadshow • Management attend meetings with potential investors • Publish Schedule One announcement Admission • Broker builds the book • Agree price • Shareholder meetings to approve pre-IPO reorganisation etc • Board meeting to approve final admission document • Sign placing agreement and all other documents • Publish admission document • Admission 3 days later • Dealings commence • Placing proceeds received
  7. 7. Preparing for listing – corporate structure Changes to share capital • One class of ordinary shares • Change nominal value? Shareholder arrangements • Unwind special rights upon admission • Lock-in arrangements • Relationship agreement (unlikely to be relevant) • Manage expectations for sell- down Appropriate corporate structure • Re-registration as plc or insert new holding company • Driven by tax • Dividend blockers/reduction of capital Share schemes • Review existing arrangements • How best to incentivise key management and other employees
  8. 8. Preparing for listing – corporate governance Board composition – split roles of chairman and CEO/implications for Jason Independent NEDs - at least two independent non-executive directors with industry and listed company experience (majority of NEDs if a premium list company) Corporate governance standards are higher for a listed company – UK Corporate Governance Code or QCA Corporate Governance Code Committees - need to establish remuneration, audit and nomination committees Senior management – any additions needed; are they sufficiently tied in? Who else will join the board? Significant shareholders – will any require board representation/existing directors remain post-admission? Investors are highly focused on corporate governance issues
  9. 9. Preparing for listing – due diligence Set up/refresh existing data room early Purpose of legal due diligence: • Identify issues that need to be: (i) disclosed in the admission document (ii) rectified pre- or post- admission •Helps with drafting the admission document • Collects information to be used for verification Assets/IP – does the group own these? Contracts: • Employment contracts – novate or enter into new contracts? • Key contracts – check if change of control provisions
  10. 10. Preparing for listing – “time commitment” Management time commitment: • IPO process is time consuming for senior management • Requires extensive due diligence (legal, financial, commercial) • Need to ensure business carries on trading as normal • Consider appointing additional resource Marketing roadshows: roughly 2-3 weeks of meetings (early look and deal roadshow) Does any marketing outside the UK need to be factored in (e.g. US, Europe or Africa)?
  11. 11. Contact details Jack Shepherd Corporate Partner T +44 20 7524 6872 M +44 7775 025506 E Louis Glass Corporate Partner T +44 20 7067 3347 M +44 7787 152731 E Niall McAlister Corporate Partner T +44 20 7067 3581 M +44 7809 756199 E niall.mcalister@cms-cmno. com Katie Nagy de Nagybaczon Corporate Partner T +44 20 7067 3519 M +44 7841 492563 E katie.nagydenagybaczon@
  12. 12. Recent CMS transactions – ECM and Public M&A IPO and €155m fund raising for Aquila European Renewables Income Fund. £100m placing on AIM. £1.3bn recommended takeover by Stonegate Pub Company £140m AIM IPO and subsequent £12m placing. £34m AIM IPO. £24m AIM IPO and subsequent £18m placing and open offer. £392m recommended offer for MedicX Fund, and £150m convertible bond. £107m placing and open offer on AIM. IPO and US$200m placing and offer for subscription. £450m placing, open offer , offer for subscription and share issuance programme. £115.3m agreed takeover of online gaming company Stride. £39m placing and open offer on AIM. Move from standard to a premium listing. £79m placing, open offer and offer for subscription on AIM. £141m block trade of shares in Main Market listed Syncona. ECMi H1 2019 report 1st for AIM deals by value 2nd for AIM deals by volume 3rd for all markets by volume
  13. 13. 13 CMS Legal Services EEIG (CMS EEIG) is a European Economic Interest Grouping that coordinates an organisation of independent law firms. CMS EEIG provides no client services. Such services are solely provided by CMS EEIG’s member firms in their respective jurisdictions. CMS EEIG and each of its member firms are separate and legally distinct entities, and no such entity has any authority to bind any other. CMS EEIG and each member firm are liable only for their own acts or omissions and not those of each other. The brand name “CMS” and the term “firm” are used to refer to some or all of the member firms or their offices. CMS locations: Aberdeen, Algiers, Amsterdam, Antwerp, Barcelona, Beijing, Belgrade, Bogotá, Berlin, Bratislava, Bristol, Brussels, Bucharest, Budapest, Casablanca, Cologne, Dubai, Dusseldorf, Edinburgh, Frankfurt, Geneva, Glasgow, Hamburg, Hong Kong, Istanbul, Kyiv, Leipzig, Lima, Lisbon, Ljubljana, London, Luxembourg, Lyon, Madrid, Manchester, Medellín, Mexico City, Milan, Monaco, Moscow, Munich, Muscat, Paris, Podgorica, Poznań, Prague, Reading, Rio de Janeiro, Riyadh, Rome, Santiago de Chile, Sarajevo, Seville, Shanghai, Sheffield, Singapore, Sofia, Strasbourg, Stuttgart, Tehran, Utrecht, Vienna, Warsaw, Zagreb and Zurich. This presentation is intended to highlight potential issues and provide general information and not to provide legal advice. You should not take, or refrain from taking, action based on its content. If you have any questions, please contact your main contact partner at the relevant CMS member firm. Your free online legal information service. A subscription service for legal articles on a variety of topics delivered by email. Your expert legal publications online. In-depth international legal research and insights that can be personalised.