Introducing Private Capital
Derek Shakespeare, Barclays
Last time we met...
• Approaches to introducing private capital
•
Initial Public Offering (IPO)
•
Sale of all or a stake in the business
to a single buyer (Corporate buyer or
Private Equity)
• Royal Mail’s path
Improving Financial Performance
New Regulatory Regime
Establishing a Track Record
Balance Sheet
Restructuring
2
Medium to Long Term
Growth Strategy in Place
Separation of Post Office
Limited (“POL”) in April
2012
Implementation of Balance Sheet Restructuring
What is an IPO?
• An Initial Public Offering involves a company listing on a
stock market and selling its shares to investors
• In recent years, most IPOs have been available only to
institutional investors, but some have allowed private
investors to participate alongside the institutions by way of
an Intermediaries Offer
- E.g. Direct Line Group,
esure Group
3
• For major privatisations, there has historically
been an element of direct participation for the
general public via
what is called a ‘Retail Offer’
Key Parties
Global Coordinator
Bookrunner
Sponsor
•
Responsible for overall oversight and
coordination of the flotation
•
Underwrites a portion of the share
offering
•
Ensures compliance with regulatory
requirements for flotation
•
Handle a number of aspects of sale:
valuation, publishing research and
arranging investor meetings
•
Publishes research
•
•
Arranges investor meetings
Makes sure proper and complete ‘due
diligence’ has been conducted on the
Company
4
Recent News
29 April
• Minister Fallon confirmed HM
Government’s plan to seek to
introduce private capital to
Royal Mail
5
21 May
• Royal Mail announced
full-year results showing a
significant improvement in
financial performance
29 May
• HM Government announced the
appointment of Joint Global
Coordinators (Goldman Sachs,
UBS), Bookrunners (Barclays,
Bank of America Merrill Lynch)
and Barclays as Sole Sponsor
10 July
• Secretary of State confirmed to
Parliament the intention to
pursue an IPO, to sell a clear
majority of Royal Mail's shares
to the public market
• 10% of the Company to be
given to eligible employees, free
of charge
Preparing the company for an IPO requires many steps
Strategy
Legal and
financial
diligence
• Story for investors
• Layout the history and risks
• Presentation to analysts
• Prospectus
• Presentations to investors
Set price range
• From ‘safe’ to
‘aspirational’
6
Legal
agreements
• Ongoing relationship
with Government
• Underwriting Agreement
Refine
offer
structure
• Institutional offer
• Retail offer for members of
the general public
• Employee offer
Retail and Employee offer
open
• Public and employees
are able to apply for
shares
Build the book of demand
• Institutional orders
determine final price
Shares trade on Stock
Exchange
• Shares listed and begin
trading
Target
Investors
• Discussions under way