Confessions from the City: The IPO broker
Time to hit the road again.
Some of our brethren like to describe us as corporate brokers, others salesmen, but we are really just highly paid nannies, hoping the latest chief executive trying to go public will remember his table manners as we introduce him and his sidekick to any fund manager we can persuade to take a meeting.
Our firms get 3%, 4%, even 5% of the funds raised in the flotation so we are desperately hoping the hapless fund managers cough up enough to get the IPO — initial public offering — away.
If they don’t, all the hours of work by our corporate finance colleagues, the lawyers, accountants and PRs will be wasted and most of them won’t get paid much either.
There is a thin dividing line between being a hero or a pariah.
Some wannabe PLC executives appear more like an ageing rock band on this two-week tour, just in newly bought suits and ties.
"If the fund managers don’t cough up all the work is wasted… a thin line divides being a hero or a pariah."
<p>The IPO broker</p>
They even demand Beyoncé-style plush riders with strict instructions on the correct filet mignon and desired temperature for the vintage Cristal stocked in the blacked-out people carrier that will whizz them round town from meeting to meeting.
I often spot “miscellaneous expenses” added to the IPO cost schedule by executives to cover exploration of some of the more dubious side of east London. Sometimes we even get invited along.
These days, the more exotic international companies have really given up on trying to raise money in London. So the days of trying to flog a Chinese shoe company are over for now, but this doesn’t mean there isn’t variety.
One week we might be babysitting gentlemen from some grim part of the north trying to flog their double-glazing company, and then the next week it might be a tweed-jacketed geologist with more hope than expectation that his bit of barren wasteland in Africa might yield gold.
If all goes well the book will be filled with enough demand for the IPO so the corporate finance geeks can sign off that the company has enough working capital to avoid going bust in the next 18 months — fingers crossed.
We can then all celebrate, spending as much of the hard-earned commission that the compliance department will let us get away with.
If not, we slink away and hope that we will get the opportunity to try again with a better company in a couple of weeks.
