There is an upcoming IPO on the London Stock Exchange of a company
that I follow closely. I believe the company has very solid prospects
and I am looking to invest a substantial sum in the IPO. I have a
little bit of experience buying and selling stocks through an online
discount brokerage, but I don't really know much about how new
offerings work especially on the London stock exchange. So, my
specific question is:
For an individual investor, is it possible to be able to buy the stock
at the price where the IPO is priced before it starts trading on the
open market. I know that institutional investors get into agreements
with the underwriters wherein they get the starting price in return
for investing large sums, subject to holdup periods etc. I have about
150K US dollars I want to invest in the ipo, is this enough money to
get some kind of deal similar to institutional investors? If so, how
would I go about trying to accomplish this? Would I talk to the
underwriters (Morgan Stanley in this case) which the company is
working with? Would I talk to the company directly?
I am a bit rusty on this, but a few things come to mind.
Underwriters are /paid/ to underwrite a new issue
- they don't put money up front
There is a form of trading in pre-issued Bonds/Shares
- it is called the Grey Market
Morgan Stanley London would probably be very interested to hear from you
- provided you can find the right department
I'm positive the company will be listing on the main exchange and not
the AIM, and will be looking at a market cap of atleast 1.5 to 2
billion GBP.
In any case, great stuff, thanks much for the help!
My understanding is a little dated, but the Grey markets (that I've
seen) tended to be between institutions, although I'm sure that they
would trade on behalf of a private investor.
I don't think that the 'to be listed' company has much say in the
matter, one phrase on the confirmation note that I remember is:
'On and if and when basis'
I doubt that you'll get much joy out of an on-line brokerage, but yet
again, things have moved on.
Definitely go through Morgan Stanley, it is the quickest route to the centre.
I suspect that this company is listing on the AIM (Alternative
Investment Market) rather than a full listing, it is quite a lot
cheaper, and makes sense if one is not raising enormous sums - say
placing 30% of a GBP 200,000,000 company.
I reckon that the right people in MS would be very interested in
someone with GBP 100,000 to place.
frde, thanks for the comment, it clears up my confusion a little bit.
Oh, I meant that the institutional investors not the underwriters put
up the money upfront.
I'll research Grey Markets further, a few questions come to mind: Does
the company going public have to agree to list its shares on this
market or is the market unregulated? Are there different grey marekts
for different stock exchanges? Are there online discount brokerages
that would lalow me to trade on these grey markets?
So at this point, my best course seems to be to get in touch with my
local office of Morgan Stanley and through them try to get to the
right persons in London.
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