New issues

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3. Types of new issue

Under stock market regulations, there are three main forms new issues can take:

1. Offers for sale - the shares are offered to all comers, either at a fixed price or within a price range. The final price is decided according to the level of demand. Two variations on this are
   
   

   a. Tenders - shares are offered at a minimum price and you are invited to tender a higher one. When all offers are in, the institutions handling the issue, known as the 'sponsors', set a 'striking price'. All those investors who bid a higher price get some or all of the shares they applied for at the striking price. Those who bid a lower price just get their money back.

   b. Offers by subscription - shares are offered at a minimum price. The issue may be cancelled if there are insufficient subscribers.

2. Placings - the shares are placed with institutions. Private investors are not allowed to purchase them directly but may be able to purchase them through their broker if their broker is one of the institutions allocated shares in the placing.
3. Introductions - the shares are introduced to the market for the first time. No new shares are actually issued. This either marks the UK market debut of companies already quoted on a foreign exchange, or the movement of a domestic company from one UK market to another, e.g. from AIM to the London Stock Exchange. Foreign companies can only be introduced if their shares are already widely held by UK investors.

1. After Sid - a short history of the new issues market 2. Do new issues offer good value? 3. Types of new issue 4. Applying via brokers and intermediaries 5. The prospectus 6. What to look for in the prospectus (1) - directors and advisers 7. What to look for in the prospectus (2) - standard company analysis 8. What to look for in the prospectus (3) - blue-sky company analysis 9. Making your application 10. Stagging 11. A word on warrants 12. A tale of two issues 13. Conclusion

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