FCA Reforms UK IPO Process - Significant Implications for Deal Timetables
November 21, 2017
On 26 October 2017, the Financial Conduct Authority (“FCA”) published new Conduct of Business Sourcebook (COBS) provisions (the “New COBS Provisions”) intended to:
- make the prospectus available to investors earlier in the UK IPO process;
- improve the quality of research reports through the competitive dynamics of the research process between connected and unconnected analysts; and
- allow prospective investors a more diverse range of views on the offering and the issuer’s prospects.
The New COBS Provisions will significantly change the sequence of milestones in a London-listed IPO deal by ensuring that:
- an approved registration document or prospectus is published before the publication of the analysts’ research; and
- unconnected analysts have the same access to the issuer’s management and the information relating to the offering as connected analysts, such that unconnected analysts can produce pre-deal unconnected research reports to be used for investors education.
In addition, the New COBS Provisions detach research analysts from investment banks’ pitching process with IPO candidates by prohibiting any contact between the prospective underwriter’s analysts and issuers until the appointment of the underwriters for the IPO is completely settled.