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An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment banks, who also arrange for the shares to be listed on one or more stock exchanges. Through this process, colloquially known as floating, or going public, a privately held company is transformed into a public company. Initial public offerings can be used to raise new equity capital for companies, to monetize the investments of private shareholders such as company founders or private equity investors, and to enable easy trading of existing holdings or future capital raising by becoming publicly traded.
Investment banking is an advisory-based financial service for institutional investors, corporations, governments, and similar clients. Traditionally associated with corporate finance, such a bank might assist in raising financial capital by underwriting or acting as the client's agent in the issuance of debt or equity securities. An investment bank may also assist companies involved in mergers and acquisitions (M&A) and provide ancillary services such as market making, trading of derivatives and equity securities, FICC services or research. Most investment banks maintain prime brokerage and asset management departments in conjunction with their investment research businesses. As an industry, it is broken up into the Bulge Bracket, Middle Market, and boutique market.
In investment banking, an arranger is a provider of funds in the syndication of a debt. They are entitled to syndicate the loan or bond issue, and may be referred to as the "lead underwriter". This is because this entity bears the risk of being able to sell the underlying securities/debt or the cost of holding it on its books until such time in the future that they may be sold. They do not necessarily acquire all the debt - this may be split into various parts and sold to a variety of Arrangers.
Financial services are economic services tied to finance provided by financial institutions. Financial services encompass a broad range of service sector activities, especially as concerns financial management and consumer finance.
A financial analyst is a professional undertaking financial analysis for external or internal clients as a core feature of the job. The role may specifically be titled securities analyst, research analyst, equity analyst, investment analyst, or ratings analyst. The job title is a broad one: In banking, and industry more generally, various other analyst-roles cover financial management and (credit) risk management, as opposed to focusing on investments and valuation; these are also discussed in this article.
Underwriting (UW) services are provided by some large financial institutions, such as banks, insurance companies and investment houses, whereby they guarantee payment in case of damage or financial loss and accept the financial risk for liability arising from such guarantee. An underwriting arrangement may be created in a number of situations including insurance, issues of security in a public offering, and bank lending, among others. The person or institution that agrees to sell a minimum number of securities of the company for commission is called the underwriter.
A syndicated loan is one that is provided by a group of lenders and is structured, arranged, and administered by one or several commercial banks or investment banks known as lead arrangers.
Greenshoe, or over-allotment clause, is the term commonly used to describe a special arrangement in a U.S. registered share offering, for example an initial public offering (IPO), which enables the investment bank representing the underwriters to support the share price after the offering without putting their own capital at risk. This clause is codified as a provision in the underwriting agreement between the leading underwriter, the lead manager, and the issuer or vendor. The provision allows the underwriter to purchase up to 15% in additional company shares at the offering share price.
A special-purpose acquisition company, also known as a "blank check company", is a shell corporation listed on a stock exchange with the purpose of acquiring a private company, thus making the private company public without going through the initial public offering process, which often carries significant procedural and regulatory burdens. According to the U.S. Securities and Exchange Commission (SEC), SPACs are created specifically to pool funds to finance a future merger or acquisition opportunity within a set timeframe; these opportunities usually have yet to be identified while raising funds.
A tombstone is a type of print notice that is most often used in the financial industry to formally announce a particular transaction, such as an initial public offering or placement of stock of a company.
Book building is a systematic process of generating, capturing, and recording investor demand for shares. Usually, the issuer appoints a major investment bank to act as a major securities underwriter or bookrunner.
AmBank Group comprises AMMB Holdings Berhad is one of the largest banking groups in Malaysia whose core businesses are retail banking, wholesale banking, Islamic banking, and life and general insurance.
CLSA Ltd. is a capital markets and investment group focused on alternative investment, asset management, corporate finance and capital markets, securities and wealth management for corporate and institutional clients.
CITIC Securities Co., Ltd. is a Chinese full-service investment bank. It offers services in underwriting, research, brokerage, asset management, wealth management, and investment advisory. CITIC Securities was established in 1995 and it is headquartered in Shenzhen, Guangdong Province. By mid-2020, it was among China's four largest securities firms, together with Guotai Junan Securities, GF Securities, and Haitong Securities.
The lead arranger, or the mandated lead arranger (MLA), is the investment bank or underwriter firm that facilitates and leads a group of investors in a syndicated loan for major financing. The lead arranger assigns parts of the new issue to other underwriters for placement, and usually takes the largest part itself. It is also called a managing underwriter or a syndicate manager. The arranger is paid either through an arranger fee, through skimming or through structuring fees.
China International Capital Corporation Limited is a Chinese partially state-owned multinational investment management and financial services company. Founded in China in 1995, CICC provides investment banking, securities and investment management services to corporations, institutions and individuals worldwide.
Guosen Securities Company Limited is a Chinese state-owned financial services company headquartered in Shenzhen, China, with more than 70 branches and 11,500 employees nationwide. It has offices in 47 major cities in China including Shenzhen, Beijing, Guangzhou, Foshan, Nanjing, Shanghai, Tianjin and Hong Kong. Guosen Securities provides sales and trading, investment banking, research, asset management, private equity, and other financial services with both institutional and retail clients in China and Hong Kong. It also operates a trading platform called GuoXin TradingStation.
Mizuho Americas was established on July 1, 2016 as a US bank holding company, as the American corporate and investment banking arm of the Tokyo-based Mizuho Financial Group.
Following is a glossary of stock market terms.
China Renaissance is a Chinese financial institution. Founded by Fan Bao in 2005 as a financial advisory firm, China Renaissance’s core business now consists of investment banking, investment management and wealth management. As of June 30, 2020, China Renaissance had advised on approximately 980 transactions worth over USD$146 billion since its inception, and the company’s private equity funds had AUM of approximately RMB39.0 billion in new economy investments.
References
- ↑ "Book Runner", Investopedia.
- ↑ "Marfin enlists Deutsche, MS as cap increase bookrunners". Reuters. 27 October 2008. Archived from the original on March 5, 2016. Retrieved 19 December 2019.
- ↑ Stowell, David P. (2010). An Introduction to Investment Banks, Hedge Funds, and Private Equity. Burlington, MA, San Diego, CA and London: Academic Press. p. 42. ISBN 978-0-08-092289-8.
- ↑ Espinasse, Philippe (2018). Cornerstone Investors: A Practice Guide for Asian IPOs. Hong Kong: Hong Kong University Press. p. 67. ISBN 978-988-8455-84-3.
- ↑ Geddes, Ross (2003). IPOs and Equity Offerings. Elsevier Finance. Oxford, England and Burlington, MA: Elsevier. p. 172. ISBN 978-0-08-047878-4.
- ↑ Iannotta, Giuliano (2010). Investment Banking: A Guide to Underwriting and Advisory Services. Heidelberg, Dordrecht, London and New York: Springer Science & Business Media. p. 70. ISBN 978-3-540-93765-4.
