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Market Positioning

In: IPO Banks

Author

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  • Philippe Espinasse

    (University of Hong Kong)

Abstract

How the banks each propose to position the issuer with investors is of particular relevance and interest. This can encompass a number of aspects. For example, prospective lead banks may be asked to recommend which group entities should be included in the vehicle to be listed, so as to maximize demand and valuation as well as to explain the pros and cons of various options. For example, in the early IPOs by Chinese issuers, it was often necessary to leave out non-productive or peripheral group assets outside of the listed company. This, however, can on occasion give rise to potential conflicts of interest or to connected or related-party transaction issues, when the controlling shareholder of the IPO company owns similar or linked assets that remain in private hands: for example, a property developer may choose to include some of his land assets in a listed company but to retain adjacent parcels, the sale or development of which may conflict with the interest of minority shareholders in his publicly-listed vehicle. Asking such a question to the banks therefore also serves to identify at an early stage potential issues that might arise as a result of selective asset injections.

Suggested Citation

  • Philippe Espinasse, 2014. "Market Positioning," Palgrave Macmillan Books, in: IPO Banks, chapter 2, pages 29-31, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-137-41294-2_9
    DOI: 10.1057/9781137412942_9
    as

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