Keys to IPO success: regulators’ recommendations
The Bank of Russia and the Ministry of Finance of the Russian Federation recommend that companies planning to go public start preparing for their initial public offerings (IPOs) in advance and do so comprehensively and meticulously. They will thus be able to rearrange their internal processes and corporate governance systems, accurately assess their long-term prospects, and devise their development strategies.
The recommendations are meant for state-owned enterprises, but may be used as guidelines by other companies.
The document describes the range of steps to be taken by a company before conducting an IPO. The entire process may be divided into three stages. The first one is analysing the organisation’s position, checking whether it meets the requirements for public companies’ activities, and assessing the transparency of its organisational structure.
The second stage involves transformation of the corporate governance system, with particular focus on the procedure for establishing the board of directors. It is also important to develop a strategy for increasing the shareholder value, adopt a management incentive programme, prepare financial and management statements for a wide range of stakeholders, and set out communication policy.
Preparing for the IPO itself is the final stage where the company needs to promptly fulfil several tasks simultaneously, namely to compile its securities prospectus, disclose information about the issue, list the stock, and prepare a marketing campaign. Further on, the company can monitor the situation in the market to choose the best moment to start the IPO.
By following these recommendations, businesses will be able to raise long-term funding more efficiently and develop trust-based relations with investors.
In addition to the tools listed in the joint letter of the Bank of Russia and the Ministry of Finance, organisations may also apply other practices when preparing for IPOs, depending on their business profiles.