It’s been a tough year for flotations, or initial public offers (IPOs). But in even the most challenging times they can still happen. Here’s how.
I was lucky to work with colleagues on one of the largest UK IPOs in 2024, Air Astana, an international airline based in Kazakhstan connecting central Asia, the Caucasus, Europe, Middle East, and Asia.
A complex business, unfamiliar to most investors and on the surface the last business you’d expect to float, this year of all years.
However, it was a textbook IPO and even priced in US dollars, proving London’s international credentials, raising $356m of primary proceeds valuing the business at about $850m. It’s fair to say Air Astana proves the naysayers wrong.
It also reveals what any aspiring IPO candidate requires to succeed in accessing London’s equity capital market:
- A great advisory team. You need people around you who’ve been there and done it. The team of financial advisers, brokers, bankers and lawyers working for Air Astana was superb, ensuring the process delivered results. The IPO communications plan that so effectively articulated Air Astana’s unique attributes was led by my colleague Joe Quinlan who now works alongside me here at Vigo Consulting. I think it’s fair to say Air Astana’s financial communications proved this was not our first rodeo…
- Investors only have limited time to focus on you, and they need to understand your business clearly and quickly. Strength and clarity of your narrative is key
- That said, because there are very few IPO candidates, now is a good time to prepare and be ready to get out ahead of the competition
- Pre-IPO there is a heap of stuff that can be achieved in getting your story understood so that your first investor meetings are much easier. Using an effective corporate communications strategy deploying a variety of media tactics to tell your story as a private company, you can save a lot of time and effort on the road to becoming a public company. People do believe a lot of what they read in the media, if it’s well researched and authoritative. It’s a great advantage to you if your advisory team includes a former journalist (preferably an editor), who’s written about IPOs and who can give you the full picture of how it works
- Having established your credentials as a private company, you can hit the ground running when it comes to the IPO at the heart of which is your equity story or investment case. This needs to be utterly compelling explaining:
- Your business model, how you generate revenue and how you make (or plan to make) profits
- Don’t shy away from talking about costs (including investment) because the flip side is margin and that’s what investors want to understand – your margin, its width and how it’s going to grow
- What differentiates you in the market and the size and strength of the competitive advantage you enjoy while being realistic about the threats and risks
- Your growth credentials, past, present and future i.e., the proof of the pudding
- The management team. Who you are and why you deserve backing.
- A successful IPO for you, as the issuer of shares, may well be the funds you raise to invest in your business. But that’s not how anyone else will judge it. Your IPO will be judged on whether the price goes up in the years subsequent. Of course, there’s always short-term volatility and markets will be patient but float at too high a price fundamentally and there’s only one way to go long term. You will get the blame, whether you like it or not, and equity markets can have a long memory. Investors bear grudges.
- When you IPO you’re selling a story. If you don’t stick to it after IPO expect to be punished. Too often I’ve witnessed companies say one thing and then do another. Markets don’t like surprises and it’s three strikes and you’re out – if you’re lucky. Many public company CEOs don’t even get that far.
I’ve seen IPOs come and go both as the Head of Business at The Telegraph Media Group for many years and as an adviser for more than a decade. If you get it right, life as a public company can be highly rewarding and one of the most stimulating things a business leader can do. Just make sure you’ve got a trusted, experienced and candid team around you who can advise ahead of IPO and then during your life as a PLC.
