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

2 Updates

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...

Filed under: news

 
 
 

33 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

 
Update
2

7 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashi ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

7 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Nepal ministries monitor 'third worst airport'
Kathmandu, Oct 22 (IANS) Five Nepalese ministries Wednesday decided to monitor the country's only international airport after it was ranked as the world's third worst airport by a famous travel website, saying the airport resembled a "bus station in an impoverished neighbourhood".
 
 
Indians in Gambia contribute to Ebola fight
Dakar (Senegal), Oct 22 (IANS) The Indian community in neighbouring Gambia, one of the three countries in West
 
 
Cuba to move UN for lifting of US embargo
New York, Oct 22 (IANS) The Cuban government will submit a draft resolution to the UN General Assembly (UNGA) Oct 28 to end an economic, financial and trade embargo the US has imposed on it.
 
 
Togo is free from Ebola, asserts PM
Cairo, Oct 22 (IANS) Togolese Prime Minister Kwesi Ahoomey-Zunu has asserted that his country is free from Ebola disease, saying that all preventive measures have been taken on borders, airports and harbours to detect the virus.
 
 
 

Latest from the Network

European Champions League standings
Paris, Oct 22 (IANS) Following are the European Champions League standings for Groups E to H after Tuesday's matches (tabulated under matches played, won, drawn, lost, goals for, against, points), according to Xinhua...
Read more on Sport Balla
 
Rogerio set to break Giggs world record
Rio de Janeiro, Oct 22 (IANS) Sao Paulo goalkeeper Rogerio Ceni is one victory away from earning his fourth Guinness World Record by eclipsing a mark held by Manchester United legend Ryan Giggs. The 41-year-old will...
Read more on Sport Balla
 
Ryan Reynolds can't keep his hands off Blake Lively
Ryan Reynolds was ''really sweet'' to Blake Lively at the Angel City Ball. The couple, who got married in September 2012, made their first red carpet appearance together in New York City on Monday night (10.20.14) since...
Read more on Celebrity Balla
 
Kris Jenner doesn't know who Bruce Jenner is dating
Kris Jenner has ''no idea'' whether Bruce Jenner is dating her best friend. The 58-year-old reality TV star, who split from the Olympic gold medallist last October after 23 years of marriage, claims she doesn't know if...
Read more on Celebrity Balla
 
When Rihanna dressed like 'Harry Potter'
New York, Oct 22 (IANS) Singer Rihanna was spotted here in a Harry Potter style costume. She wore the wizard-like get-up while heading for a business meal here Monday, reports mirror.co.uk. The 26-year-old combined a...
Read more on Celebrity Balla
 
Germany raises humanitarian aid to Iraq
Berlin, Oct 22 (IANS) Germany has pledged a further 20 million euros (about 25.5 million dollars) in humanitarian aid to Iraq, the foreign ministry said in a statement Tuesday. The additional funds are immediately...
Read more on Politics Balla
 
India calls on Israel, Palestine to resume peace process
United Nations, Oct 22 (IANS) India has called upon Israelis and Palestinians to resume the peace process as "dialogue remains the only viable option" to address the issues confronting the region. In a brief statement...
Read more on Politics Balla
 
Airstrikes help ground forces fight IS: Pentagon
Washington, Oct 22 (IANS) Kurdish forces are in control of the majority of the Syrian city of Kobane despite efforts by the Islamic State (IS) to take the town, a spokesperson for US defence department said Tuesday....
Read more on Politics Balla
 
Palestine, Israel urged at UN to halt unilateral initiatives
United Nations, Oct 22 (IANS) UN Secretary-General Ban Ki- moon Tuesday called on Palestine and Israel to overcome differences and halt unilateral initiatives that fuel mistrust, so as to pursue long-term stability in...
Read more on Politics Balla
 
China urges Israel to create conditions for peace
United Nations, Oct 22 (IANS) Chinese government has called on Israel to create necessary conditions for the resumption of peace talks with Palestine. At an open debate of the Security Council on the situation of the...
Read more on Politics Balla