Issuing shares - part 2
Taught by Ben Wilson · AI tutor support included
You'll learn how share placings work as an alternative to IPOs, and why companies choose this route. In this lesson, you'll explore the key advantages—lower costs, faster execution, and less public disclosure—alongside the risks, particularly increased investor activism.
This lesson is part of a paid course
Buy the course to unlock every video lesson and the AI Tutor, plus mock exams with feedback on CIMA courses.
Already bought? Sign in
Ask the AI tutor anything about this lesson
It knows every lesson in the course — explanations, clarifications, practice questions.
In this lesson
- 0:00 Introduction to share placings
- 0:42 Advantages of placings over IPOs
- 1:14 Disadvantages and investor activism risks
- 1:42 Analysis question: Redmond Inc case study
- 3:29 Evaluating IPO failure causes
- 4:33 Summary of placings and share offerings
About this lesson
Through a worked analysis question, you'll see how these concepts are tested in exams and develop the judgment needed to evaluate capital-raising decisions in real business scenarios. Share placings involve an investment bank approaching pre-identified investors to buy shares at a fixed price, rather than opening the offer to the wider market. This method is significantly cheaper and quicker than an IPO because it requires less marketing, a simpler prospectus, and fewer people involved. You'll also discover why companies benefit from keeping sensitive commercial information private, away from competitors. The downside is that investors in placings typically buy large stakes, giving them material influence over the business and increasing the risk of shareholder activism. The worked example walks you through a realistic scenario where an IPO failed and explores the possible reasons—including pricing errors, poor prospectus quality, and restrictions on share ownership post-flotation—helping you develop the analytical skills needed to tackle similar questions in your exams.
Duration: 5m
Transcript
Every lesson comes with a full searchable transcript - included with the course.
Get the F3 Objective Test course
All 134 video lessons, timed mock exams marked instantly with an explanation for every question, an AI Tutor in every lesson and lifetime access.
Already bought? Sign in