A company life map - the rise and fall of a hot stock

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3. AIM flotation by a placing of new shares

In 1996 Country Bumpkin lists on the Alternative Investment Market, the stock exchange for small, growing companies.

• The company appoints a nominated advisor to advise on the flotation and a broker to handle the sharedealing.
• It submits an application and prospectus to the UK Listing Authority (UKLA) and London Stock Exchange (LSE) which contains:

- a description of the business and its capital structure
- financial information and a trading history
- details of the management, administration and supervision of the company
- recent developments and prospects

Note that the company is not obliged to make a profits forecast.

• The prospectus announces the company's intention to issue 2.5 million new shares at 80p each. This equates to one quarter of the company's post-flotation share capital, and puts a value of £8 million on the company.
• The company chooses to place the shares with institutions, in preference to an Offer for Sale, a Tender offer, or an Introduction.
• Private investors may be in a position to buy the new shares if they are a client of a broker who is involved in the placing. Otherwise they have to wait until the shares had been issued, and buy them on the open market.
• The effect of the flotation is to enlarge the company's equity capital by £2 million, and to expand the number of shareholders to 32, including the 24 institutional investors who took part in the placing.
• Once the shares start trading on the 'secondary market', new investors can buy shares on the open market, and the number of shareholders and their identities will change.

  1. Country Bumpkin - the early days 2. The decision to go public 3. AIM flotation by a placing of new shares 4. AIM flotation by an offer for sale 5. AIM flotation by tender offer 6. AIM flotation by introduction 7. First day of public trading on AIM 8. A growth strategy 9. End of lock-in period 10. The acquisition trail 11. Rights issue 12. Scrip issue 13. Preliminary results announced 14. Full results announced 15. Rumours of a deal - clarifying announcement 16. Takeover of rival - cash and shares deal 17. Convertible loan stock 18. Preparation for the main market 19. Admission to the main market 20. Move into FTSE 250 21. Share split 22. Share buyback 23. Director sells shares 24. New York-led collapse of tech stocks 25. Suspension of shares 26. Hostile bid for Country Bumpkin 27. Liquidation

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