In this groundbreaking guide, I explain the process of gathering cornerstone investors in connection with IPOs and other equity offerings.
Using my trademark simple and jargon-free language, I detail the targeting strategies, documentation, marketing and allocation of shares and other securities to these reference shareholders, and analyze why and how they make or break today’s new listings across Asia’s key markets.
This essential guide – and the first of its kind – contains key information on the legal framework for cornerstone investors in Hong Kong, Malaysia, and Singapore, and offers practical advice on how best to structure and conduct a cornerstone investor offering.
It also discusses some of the more controversial issues associated with the practice of cornerstone investment and includes many real-life examples of cornerstone deals, sample documents, cornerstone investor profiles, an investor target list, and a comprehensive glossary.
Cornerstone Investors: A Practice Guide for Asian IPOs constitutes essential reading for company directors, investment bankers, investors and other market participants, legal advisers, accountants and consultants, students, journalists, and generally anyone with an interest in equity capital markets.
What’s in the Book?
1.1. What are cornerstone investors?
1.2. From early beginnings in Europe to three key Asian jurisdictions today
1.3. Cornerstone tranches or corporate placings?
1.4. Differences with pre-IPO investors
1.5. Types of cornerstone investors and the US option
1.6. Individual subscription amounts
1.7. How many cornerstones are in an IPO?
1.8. Tranches sizes and the question of liquidity
1.9. What cornerstones bring to IPOs
1.10. What is in it for the cornerstones?
1.11. Obligations of cornerstone investors
2.1. Hong Kong
3.1. Defining the equity story
3.2. The initial approach
3.3. Targeting potential cornerstones
3.4. Drawbacks of a “free-for-all” approach
3.5. Cornerstone marketing and multi-bookrunner syndicates
3.6. The bookrunner script
3.7. The non-disclosure agreement (NDA)
3.8. What happens after the NDA has been signed
3.9. Firming up the bids
3.10. The subscription agreement
3.11. Finalising the allocations and settlement
4.2. Cornerstone investors: a way around market forces?
4.4. The lock-up requirement
4.5. Recent developments
Appendix 1: Recent examples of cornerstone tranches in Hong Kong
Appendix 2: Older examples of cornerstone tranches in Hong Kong
Appendix 3: Recent examples of cornerstone tranches in Malaysia
Appendix 4: Recent examples of cornerstone tranches in Singapore
Appendix 5: Sample script for an initial approach to potential cornerstone investors by bookrunner banks
Appendix 6: Example of a non-disclosure agreement for potential cornerstone investors
Appendix 7: Example of an international cornerstone subscription agreement
Appendix 8: Selected profiles of cornerstone investors
Appendix 9: Target list of potential cornerstone investors (by jurisdiction)
Cornerstone investors have now been around for at least 15 years, yet very little has been written about them over that timespan, bar the odd academic study or short, factual articles on individual transactions published in the media. Despite a few attempts to introduce the concept to European markets, they are still essentially a phenomenon limited to three jurisdictions within Asia…
There is no better person to shed light on the opaque world of cornerstone investing in Asian IPOs. Philippe Espinasse writes clearly, substantively, and expertly”Jasper MoiseiwitschAsia companies & markets news editor, Financial Times
Cornerstone investors have taken centre stage in Hong Kong’s IPO market. This book is needed now more than ever”Matthew ThomasAsia bureau chief, Euromoney Institutional Investor
As engaging as it is informative. Espinasse has cut through legalese and jargon to create a pragmatic overview of this widely misunderstood, and distinctly Asian, investment banking concept. Packed with recent examples, this book doesn’t just teach you about cornerstones; it also provides an insider’s take of the region’s capital markets hubs”Danielle MylesThe Banker