A bulletin from Marsh’s London office notes that “following a prolonged period of inactivity for Initial Public Offerings (IPOs) as a result of the global recession…early signs of economic recovery and new rules for UK firms listing on the London Stock Exchange (LSE) will lead to an increase in IPOs in 2010. In turn, this will fuel increased demand for management liability insurance.”
Several economic signs seem to point to a stronger IPO market in the coming months, according to a panel of M&A experts at a recent Marsh seminar. The panel included: Professor Scott Moeller, Director, M&A Research Business Centre, Cass Business School and Nick Langford, Head of UK and International Business Development, London Stock Exchange Group.
Marsh also pointed out that in April the UK regulators will implement new “lighter-touch” rules for UK firms listing on the LSE [London Stock Exchange], which, Marsh said, “would “enable companies to choose either a standard or premium listing and will potentially encourage more firms to go public. The new standard listing, which was previously only available to overseas companies, means UK firms can get a listing without the need to comply with onerous rules on corporate governance, capital raising and disclosure often associated with a premium listing.”
Daniel Max, a Senior Vice President in the Private Equity and Mergers & Acquisitions (PEMA) Practice, explained: “IPO activity came to a virtual standstill between mid-2008 and the end of 2009 when investors headed for cover in the face of the global meltdown in the financial markets. But as confidence begins to return to the equity markets, more companies are now thinking about going public this year.”
He added that “for managers and directors who have decided that going public is the best option for their companies, insurance protection is available offering them peace of mind during the listing process. There is a great deal of interest among Marsh’s client base for transaction management liability insurance policies specifically designed for the IPO.
“Coverage can be tailored to the individual IPO. This type of insurance is particularly attractive because the policy doesn’t affect a company’s directors’ and officers’ liability coverage. It is all ring-fenced in a multi-year deal, priced by underwriters who understand the specific risks associated with an IPO transaction.”
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