The regular publication of research about companies, particularly listed companies, is part of the normal activity of research analysts. This research is intended to provide an independent and objective view of the subject company and its business and may well include a recommendation by the analyst to its clients to buy, sell or hold that company’s securities.
As part of the marketing of an IPO, it is usual practice for research analysts connected to the lead bank and other members of the syndicate to publish research reports on the company one week after the publication of the registration document. The reports are circulated to the bank’s institutional clients prior to the offering.
A detailed and fairly lengthy analyst presentation is typically prepared by the company with significant input from the banks. Connected analysts are then invited to attend the meeting which is conducted by senior management of the company and normally comprises a presentation of the business followed by an extensive question and answer session. All of the information provided to analysts, to the extent that it is material, must be included in the prospectus. Connected analysts are usually given three to four weeks after the management presentation to prepare their report.
In a Main Market IPO, for the last few years, FCA rules have required that unconnected analysts (that is, research analysts outside the underwriting syndicate on an IPO) are given the same access to, and information about, the issuer as connected analysts. This will not apply to an AIM IPO.
The publication of the bank’s research raises a number of issues, including around the independence of the report and the role the company may have played in developing the information contained in it, particularly in relation to the forecasts included in the research report that are developed by the analyst, based on information (to be made public in the prospectus) provided by the company. The analyst will need to maintain their independence from the IPO process despite the fact that the report will be published during this process.