I have been involved in two IPOs where our software solution has been used to great effect to identify the investors interested in our client company. African IPOs are beautiful in this respect – huge demand and interest and an amazingly strong following from the diaspora.
A few statistics of interest relating to effective online IR at IPO stage (extracted from our clients and are indicative of course): Online IR at IPO stage
- attracts 3 times the number of visits to your website than an established company in the first year post-listing
- generates visits from investors in 30% more countries than an established company websites in the first year of listing
- have 30% less time-on-site because of the absence of historical information BUT
- typically attracts twice the number of unique visitors to your website than an established company in the first year AND will attract twice the number of page views on your investor relations website
- have 30% less pages per visit because typically the absence of historical information, this reverses over time
During the IPO the ability to immediately communicate with the market (allay their fears about shortages of prospectuses or delayed timetables, IPO results etc) occurs at the press of a button. The ability to receive feedback immediately can really help avoid disasters and enable you to change the structure of the transaction administration or communication to avoid those little things that blow out an IPO – just ask some of the big advisory players that have implemented IPOs in Africa – there’s always one or two things that go wrong.
I have lead managed 5 IPOs personally and the comfort that you get being in control of the IR function online in the advisory funtion is huge. The PR and marketing agencies are secondary players as opposed to perceived primary players (in the absence of an online solution where the advisor is more in control of the IR / media function.)
Both IPOs I did also obtained regulatory approval to have application forms delivered with softcopy prospectuses. The legal issues associated with distributing application forms without prospectus is a significant legal one given the massive market scams of the South Sea Bubble etc.
How did we give the regulators comfort in our product?:- provided a SOX compliant online shareholder communications platform: the full audit trail that shows the investor reaceived the prospectus with the application form.
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As an expert in IPOs, what are your predictions about BRALIRWA IPO?
Hi The IPO will be structured in such a manner that it will be guaranteed to be a success. It will be a small IPO by value and all the investors lined up to ensure that the IPO succeeds. This is how we handled the establishment of the Malawi Stock Exchange back in 1996 – I was the first CEO of the first stockbroking firm there. A key issue to concentrate on is whether the listed company actively engages the retail shareholders that purchase shares, actively encourages them to attend the AGM and actively educates them in their rights as shareholders. I think that based on experience token efforts will be made to do this. All the important people involved in the IPO will strut their chests out all proud. To me the first IPO has very significant implications for the rest of the development of the market – priced too cheaply and speculation will come in – uninformed speculation as per the Kenyan IPOs. The Government moral obligation to put in place responsible shareholder education initiatives is significant here to stop this sort of thing. On the other side if the offer is priced to keenly ie expensive then it wont get the interest of investors. The long term motivation for savers in Rwanda is very high and this has to be communicated. Another slant for me is Rwanda’s investment into the Internet and IT – if they do not from day one actively promote the internet in shareholder communication then vested interests will hold back the country from its true objectives.