Equity Capital Markets (ECM)

Equity Capital Markets (ECM) is the Primary Market place for Companies to raise Equity Capital. A Company could transform into a Public Company via an IPO or raise Capital via the issue of new Shares.

Equity Capital Markets refers specifically to the Primary Marketplace for Companies to list newly offered shares on the local Stock Exchange. Key in the management, pricing, underwriting and distribution, of the new Shares will be the Company’s Primary Broker, which is a member of the Exchange. The main Equity Capital Market transaction is the Initial Public Offering (IPO). Any of the array of corporate structures could go through the listing process via an IPO. The process of demutualisation, taking a Mutual Company into a listed Public Company, which happened when several Mutual Insurance Companies listed. Or taking a Private Company and listing it on the Stock Exchange for the first time.

The other most common transaction involves an increase in Share Capital via the issuance of new Shares. The new Shares could be presented to the Investment Community by one of two main methods. First, a Public Offering, where the new Shares are open to one and all to subscribe. Or two, via a Private Placement where the new Shares are offered to existing Shareholders and selected interested parties. In order to generate interest in an increase in Share Capital, the new issuance could be offered at a discount to the Share Price. Other Equity Capital Markets transactions include, the issuing of Preference Shares or Warrants issued by the Company. If exercised, the Warrants will increase the Company’s Equity base at a point in time in the future.