It’s approaching dawn in New York. We’re keeping a watchful eye on trading, as our market in the East has opened, trying to get a sense for how the US market will react when it too opens for trading. Earlier, we had ushered in a press release, with the timing of issuance earmarked to serve the needs of two exchanges. Within easy reach is our prepared Q&A, as we anticipate investor inquiries to come in, first from the market now in active trading and then from the US.
IPO x 2
As companies weigh the merits of a dual listing, we note that the main rationale for doing an IPO not once, but two times, rests primarily on access. Access not only to two capital markets—for liquidity, sophisticated investors, and public market funds, but also to target addressable markets—essentially, commercial reach of products and services to propel growth.
In evaluating access, we note successes made in selecting exchanges where the Company has an established or is establishing a commercial footprint, providing context for the opportunity and laying practical groundwork for the public markets. Therefore, the benefit to the Company is in the support gained from investors that have local/regional understanding of the commercial opportunity and their ability to provide liquidity in the exchange, shoring up management’s ability to raise capital to grow the business.
As the Company expands its commercial operations beyond local/regional markets to establish a more global footprint, again we note successes made in selecting an exchange where sophistical investors participate. These investors not only have resources to evaluate investment opportunities that cross the pond, but they also have more substantial assets under management with varying investment strategies that can be earmarked to align with the Company’s goals. Therefore, the Company benefits by having access to a larger pool of capital to raise the funds needed to establish a more global presence.
Dual listing is a strategic decision that, once made, requires some investments for smooth execution.
What does this mean, exactly? On a day-to-day basis, it means having resources to cover the requirements of two markets, with trading around the clock. In an IPO, this involves the assembly of banking, legal, and accounting teams that provide expert advice on matters that affect two distinct exchanges. It also involves investor relations support with capabilities and relationships to cover both regions.
The overriding goal for these investments is to drive multiples in returns. The expectation is for two successful capital raises generating resources to advance business plans.
Coordination 1×1
For seamless execution, close coordination between regions is a necessity, followed closely by flexibility. For example, regulatory requirements between regions may vary, resulting in some customization. While one market may require additional public disclosures, the other may not. Regardless, relevant information is provided, which maintains transparency and reinforces good governance.
While seeming repetitive, close coordination between regional teams helps ensure that redundancy is minimized. Instead, there is a focus on shared know-how that can be leveraged across two exchanges.
Company Coverage 1-4-All
While management teams have the benefit of engaging consultants and expert advice across geographic regions, those experts all share the same management team. And a near 24-hour coverage for anyone in the managerial ranks is not sustainable.
We have found success with the strategic, regional deployment of the company’s management team. C-level personnel are selectively posted across regions, with support from local teams. For instance, the CEO is based in the US, while the CFO is stationed in the East. We have also seen CEOs who have established operations out of two regions and divide their time as they travel. There are also creative scheduling techniques employed, with morning ET maximized for close coordination across time zones.
If your company has decided to dual list an IPO, you can ensure smooth day-to-day activities with regional expert assistance, close coordination amongst all parties, and a management team geographically dispersed and supported to meet the needs of two markets. Contact our team today for guidance in your dual listing.
Vivian Cervantes, Managing Director
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