360° Coverage : Why CEOs Need A Better Approach With IPO Investors

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Why CEOs Need A Better Approach With IPO Investors

Mar 4 2014, 2:32pm CST | by

The banking industry needs to reset their approach to growing in the public markets. Despite economic headwinds and emerging complex regulations, a new Ernst & Young survey shows that...

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21 weeks ago

Why CEOs Need A Better Approach With IPO Investors

Mar 4 2014, 2:32pm CST | by

The banking industry needs to reset their approach to growing in the public markets. Despite economic headwinds and emerging complex regulations, a new Ernst & Young survey shows that institutional investors are increasingly positive about the IPO market – and the financial services industry has the highest appeal in every region; 51 percent of investors list financial services as one of the top three sectors in their portfolios.

Recently, I hosted a panel at the American Banker Association’s National Conference for Community Bankers regarding strategies for community banks to raise capital and pursue a public offering. The key takeaway was the importance of having a relationship with your investors instead of trying so hard to “sell” them. It is about understanding the criteria institutional investors are using to evaluate investment strategies, and being prepared to make necessary changes to accommodate your investors.

Consider the following steps a bank should take to better understand how to approach investors and partner with them on an offering:

1) Determine Your Cost of Capital. The first decision a bank needs to make when considering a public offering is how it will measure its cost of capital. There are numerous fees associated with going public, as well as intangible costs and benefits. All of these factors need to be assessed to determine how capital is valued, and then how much is required. Many banks make the mistake of thinking about how to raise capital before truly assessing how much backing is required. This is a critical deciding factor of the strategy for raising capital. Knowing what you need influences the audience you target – whether friends and family or a more sophisticated investor and institution.

2) Hand Pick Your Target Investors and Take Time To Know Them.  Once you determine the type of investors you need, invest time in getting to know them and think about the role they will serve. Some investors provide added value due to their industry expertise, others have deep wallets and a willingness to spend on a good idea. Others, however, may have the financials you need but may turn into hostile investors. Going public is a process and can be personal for the leadership seeking to fulfill their vision, so balance and assess the pros/cons of your investor targets.

3) Build Relationships – Don’t Just Sell – Your Investors. Short-term investors such as hedge funds or private equity investors typically look to exit your offering in five years or less; longer term investors want to stay in your stock as long as you’re performing well, relative to the market. They are vested with an expectation that you will generate a certain return for shareholders. Ensure a long-term relationship with your investors – work to create a shared vision for your bank and be prepared to make necessary compromises to fulfill mutual goals.

4) Communicate your Vision. Get your management team aligned on your vision for the company – why you are pursuing the IPO, how it extends your current mission and what the future looks like for the company. A clear story that articulates why you are going public and where you see the company headed not only reinforces your credibility, but gets longer-term investors excited about the prospects ahead.

The future of community banking depends on the ability to achieve strong, stable growth. Banks that are looking for growth through a public offering have a real opportunity to define their vision for expansion and share it with investors who will serve as partners in fulfilling that vision. To learn more about how ConnectOne Bank secured investors, see my post on wooing the public markets here.

Source: Forbes Business

 
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7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat was ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken into by robbers. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan Rakyat tod ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Se ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in th ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Mustap ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

8 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation of ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

8 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Sche ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

8 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 bill ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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