How significant are new issues of shares in the UK?
Issues of new shares to the public account for around 10% of new equity finance in the UK. Whilst not significant in the overall context of UK equity financing, when new issues do occur, they are often large in terms of the amount raised. New issues are usually used at the time a business first obtains a listing on the Stock Exchange. This process is called an Initial Public Offering (“IPO”) or a “flotation”. Methods The process of a stock market flotation can apply both to private and nationalised share issues. There are also several methods that can be used. These methods are: • An introduction • Issue by tender • Offer for sale • Placing, and • A public issue In practice the “offer for sale” method is the most common method of flotation. There is no restriction on the amount of capital raised by this method. The general procedures followed by the various methods of flotation are broadly the same. These include – Advertising, e.g. in newspapers – Following legal requirements, and Sto
