The ECM ecosystem benefits from the expertise of professional financial consultants for the best placements and excellent gains.
The Equity Capital Market (ECM) is an entity that bridges businesses and financial institutions, in that it is an instrument by which equity capital is raised for the businesses by the financial institutions. An experienced and reputed financial institution offers end-to-end services in the ECM ecosystem. Hence, it provides a diverse portfolio for companies to operate in the ECM, from distribution and/or allocation of new issues/units to IPOs, and from private placements to comprehensive marketing.
How is equity capital computed and what implications does it have for the business? To put it simply, it is measured basis the company’s value and the assets it holds. When raising equity capital, a business essentially sells all or a portion of an asset in return for funding. It differs fundamentally from debt funding, which hinges on acquiring new debt to raise capital.
Why be a part of the ECM?
Most companies new to the concept of ECM are unaware of the fact that it deals not just with stocks, but also with such financial instruments as futures contracts, swaps and options. It is important for businesses to participate in the ECM because it provides a gateway for them to raise supplementary funds by issuing stocks. However, ECMs are one component of the entire stock market, and part of the larger primary markets space for IPOs and new presentations made by companies in a bid to raise capital.
The ECM and expert handling
Reputed investment companies in Kuwait are adept at underwriting for IPOs of companies, by helping the business transition smoothly into going public. The financial institution underwrites the IPOs as also promotes and facilitates the acquisition of additional principal on request.
An experienced ECM group from the financial institution comprises a team that deals with IPOs, listing advisories and public and private placement. As such, it is expected to offer advisory services also on the most premium listings in the GCC region. When shortlisting an ECM group, look for the institution’s credentials and track record, but most importantly, its roster of clients, listings value and services offered therein.
Though the fee structure for underwriting and listing services will vary from institution to institution, it is pertinent to remember that the ECM group fees are generally calculated as the difference between the sale value of an offering and the amount forwarded to the business whose equity is being sold/stock is being issued for listing.