Current Issue

Nov 5, 2014
Category: Current Issue

Sandal is divided into two distinct divisions: the PowerConnections brand, is a long established and successful manufacturer of converter plugs; and Energenie, an innovative consumer tech brand with an app driven whole house automation solution, as well as an established range of energy saving electrical products.

Admission Document
 

Different Types of Investment

Investors may come across the following terms or type of offers:

Public Offers:

Initial Public Offering (IPO) 

An IPO is an invitation to subscribe for a new issue of shares at a set price via a public offer document admitting the company to a market such as AIM or PLUS Markets (see section on Unquoted Markets). The type of document and rules to which it must adhere depends on the amount being raised.

If the figure to be raised by a company is in excess of €2.5m the document must comply with the rules of the UK Listing Authority and the prospectus will need to be approved by the Financial Services Authority (FSA).

This means that the prospectus has to comply with the rules set up for companies listed on the main London Stock Exchange. To comply with these rules and provide supporting documentation that has been verified by lawyers and accountants is an expensive and time consuming process for small companies trying to raise finance.

For companies raising less than € 2.5m things are simpler, as the document should comply with industry best practice and it must be issued by a person authorised and regulated by the FSA to bring about and arrange deals. Importantly the document must be ‘true, fair, not misleading and have no vital omissions’.

An offer would usually remain open for 40 days, but can be extended once the minimum subscription has been received.

Rights Issue

A Rights Issue is a new issue of shares, exclusively offered to existing shareholders at a set price, usually at a discount to any existing share price.  As the shareholder has a “right”, these rights may be tradeable in the market

Open Offer or Entitlement Issue

An Open Offer is similar to a Rights Issue in that shareholders are entitled to subscribe for shares in proportion to their existing holdings.  Unlike a Rights Issue, an Open Offer provides a shareholder with the entitlement to subscribe but not a tradeable right to subscribe.  For this reason Open Offers are often called Entitlement Issues.

Restricted (Private) Offers:

Private Placings

This is a way of raising funds by restricting the number of individuals that are to be offered the shares. Any documentation for the placing will have to be approved by an FSA Regulated Person unless, as is often the case, the placement is only to institutions, Sophisticated Investors and/or High Net Worth Individuals.

Pre IPO Funding

As the name suggests, this money is raised prior to an IPO issued by a company.

Usually this type of Private Equity is supplied by family/friends, Business Angels or Venture Capitalists. Additionally, Venture Capital Trusts and EIS Funds like to invest at this stage as they can negotiate a better deal than by subscribing as part of an invitation to subscribe at a set price, such as in an IPO or private placement.

MBO (Management Buy Out)

A transaction that enables the current management team and investors to buy a sufficient shareholding in the company that effectively gives them control of the business.

MBI (Management Buy In)

A transaction that enables a manager or group of Managers from outside a company to buy into it (not necessarily giving them control of the business).

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