Listing process Regulated Market

Listing process Regulated Market General Standard


After the company's thorough analysis and evaluation the stock will be offered for sale to the investors by means of a public offer with the assistance of the banking syndicate. After expiration of the subscription period and price determination, the securities are allocated to interested buyers.

Briefly, you have to do the following:

  • Preparation of an offer for sale
  • Offering price determination
  • Stock placement
  • Allocation of stock to investors


A placement within the scope of an IPO (“Initial Public Offering“) means the execution of a first-time public offer for sale of securities on the capital market. Therefore, the placement is among the most important functions of the syndicate bank and is critical for going public successfully.

In the process it is the company’s objective to sell the complete amount of stock to be placed at a price attractive to both company and investors.

Prior to actual placement proceedings, an agreement on the takeover of the new securities for sales purposes (= takeover agreement) is concluded between the company and the banking syndicate, which is followed by the offering procedure. At the end of placement proceedings, the securities offered will be allocated to the future investors.

If the placement is not public, it is a private placement. In case of a private placement the stock to be placed is offered for sale exclusively to a limited circle of investors and usually the offering will not be communicated through public media.

The Public Offering

For an IPO the stock is advertised in public and the company is presented, among other means in the course of road-shows, to the institutional investors. In order to provide investors with the information required for their investment decision, the company publishes a securities prospectus which has to be reviewed and approved of in advance by the Bundesanstalt für Finanzdienstleistungsaufsicht [BaFin, German Federal Agency for Financial Market Supervision].

The public offer for subscription and sale is directed both to the institutional investors and to the public (above all, to private investors); besides better sales potential, the public offer benefits from the fact that it will address a wide-spread investing public and will attract corresponding attention.

Thus, a sufficient free float of the securities is achieved, which is not only a requirement for the securities’ admittance for stock exchange trading on the Regulated Market, but also for well-functioning stock trading in general.

Determination of the Offering Price

Price determination is among the most important steps in the course of a securities issue as the price will decide on the proceeds and, thus, on the success of the issue. The offering price can be determined as a fixed price prior to starting the offering (so-called fixed price procedure) or the price can be established openly during the offering procedure based upon the principle of supply and demand (tender procedure and book building procedure).

The determination of the offering price is based on a thorough analysis and evaluation of the company (due diligence) which has been performed in preparation of the price determination under consideration of the stock market valuation of similar companies (peer group) as well as the general market situation. Based upon the market price for shares in the company calculated in the aforementioned way (“fair value“), the price or a price range for the stock is determined. On the one hand, the sales price shall meet the company’s financial requirements, but shall also contain, on the other hand, potential for price increases in order to let investments in this security appear as an attractive option to possible investors.

Depending on their focus during the issue, the company will select one of the following methods for the offering price determination:

  • fixed price procedure
  • tender procedure
  • book building procedure

When the fixed price procedure is chosen, the stock is placed at a fixed price, i. e. prior to the offering’s start, the company and the syndicate members will fix a sales price which forms the base for the public offering and will be communicated to the market in the course of publishing the offer conditions. This method of price determination bears the disadvantage that company and syndicate members will not be in the position to react to a changing market environment in the course of the offering. If the price is considered too high by market participants, there is an increasing risk that either not all of the securities might be placed or the price might need downwards adjustment, which would result in the issue revenue falling behind expectations and the success of the issue being jeopardized.

For placing a securities issue through the so-called tender or auction procedure, there will be no decisive sales price determined. The offering merely contains details regarding the security’s features, the issue volume and a minimum price as lower limit. During the subscription period, interested investors may enter a purchase bid at minimum price or above. At the end of the offer period the buyers will purchase a security, depending on prior determination, either at a standard price calculated for instance as the arithmetic mean of all bids submitted (so-called “Dutch procedure“) or at the purchase price as set forth in their individually submitted bid (so-called “American procedure”). This price determination method will determine the price according to the principle of supply and demand. The issue revenue and, therefore, also the success of the public offering will depend upon the market at the end of the day. As a consequence, investors need sufficient knowledge of the capital market and the current market situation in order to submit an adequate bid for the securities at sale when this price determination method is applied.

Finally, the book building procedure combines the advantages of the fixed price procedure with those of the auction procedure. During this past years, it has developed to become the most favoured price determination instrument especially for stock issue and, thus, will be explained in more detail below.
The book building procedure is divided into different stages:

For the classic book building procedure company and banking syndicate will jointly agree on a price spread prior to the start of the offer period. This spread will be ascertained in advance by the syndicate members based upon the due diligence performed in combination with a targeted investors’ survey. In the course of such survey, the banks inquire the interest of potential investors in the stock by asking, for instance, for non-binding purchase bids. Prior to the start of the actual offering stage, a price spread will be determined and published accompanied by any other Information regarding the securities offered.

At the same time as the discussions with investors for the price spread determination take place, the company will present itself accompanied by the banking syndicate at various finance venues to give interested investors an opportunity to collect in systematic manner information regarding the securities and the company. These so-called “road shows” aim at winning over potential investors by means of professional marketing, individual contact to certain investor groups and providing of transparency.

Upon start of the subscription period, all bids received within the allowed price spread are entered into a central order book. After the period’s expiration the offering price is determined according to the existing bids (closing). Purchase bids below this offering price will not be considered in the process of stock allocation. Investors offering a price higher than the final offering price will purchase the security at offering price. In case the number of purchase bids should exceed the number of stock to be issued by the company, allocation criteria will be determined. Thus, this kind of price determination leaves the company with the option to take influence on the kind and spreading of their future shareholders in the course of deciding on the sales price.

As a variation of the classic book building procedure, the so-called “decoupled book building” has developed. For this method the subscription period is shortened to a few days and the price spread is published only a short while prior to opening the order book. At this moment, the road show usually has been finished. Therefore, the marketing of the securities is decoupled from the determination of the price spread and offering price. In doing so, the risk that the issuing price might be getting under pressure e.g. from public opinion is limited to the stage of the shortened subscription period.

The Allocation

The submission of a purchase bid or an order for subscription of securities does not create a title to purchase such securities at all or at a certain price. Such title requires an allocation. In the course of the allocation the company and the syndicate manager decide if and how many stock an investor shall receive based on the bid they submitted. For this allocation decision the intended shareholder structure will be the central criterion. Here thoughts might be considered, if, for instance, a broader spreading of stock should be aimed for, if more private investors or institutional investors are wanted as shareholders or if international shareholding is desirable.

In case of oversubscription of securities, when the number of purchase bids exceeds the number of stock actually issued by the issuer, the company and the syndicate manager will set forth allocation criteria according to which the stock will be assigned. The investors may receive only a part of the requested securities based upon a calculated quota resulting from the allocation criteria.

Some companies use the option to reserve part of the securities offered to the public for employees of their company or of affiliated or partner companies of the issuer and to allocate stock preferably to these investor groups in the scope of “friends and family”- programs.

Generally the allocation takes place already in the evening of the last day of the placement period directly following the closing and is published through electronic media on the same day. Securities launched for public subscription can be introduced into stock exchange trading only after the allocation has ended.

The Placement Risk

In order to transfer the placement risk, depending on the company’s interests and willingness to assume risks partially, or wholly to the banking syndicate, the company and the issuing syndicate, as a rule, will conclude a takeover agreement prior to the start of the public offering. There are various options for risk distribution.

If the parties choose the form of an underwriting syndicate, the syndicate banks will purchase the intended number of issued stock (syndicate share) at a fixed price in order to sell it afterwards on the capital market in their own name. The placement risk (sales and price risk) lies with the banks. Remainder of stock not placed at the end of the offering and allocation proceedings will remain for the time being in proprietary possession of the syndicate members.

In the converse case, the banks will function as mere selling group. The banks act as commission agents for the initial placement of the securities. They may provide the company, if need be, with a standing of the underwriter for pre-financing the securities launch and place the securities on behalf and in the name of the company. In this case the complete placement risk regarding the price for the securities offered as well as the number of sold stock lies with the issuer.

In practical use, a combination of both variations has developed, the underwriting and selling group. This form combines the takeover of securities by the syndicate banks with the intention of leaving the performance and placement risk in adequate extent with the candidates for flotation. This may be achieved, for example, by setting the time for purchase or takeover to a date near the end of the subscription period or by determining the purchase or takeover price to the legal minimum amount. With an underwriting and selling group, there are options for the company to make arrangements regarding the decision on the eventual size of the capital increase and the determination of the launch time. In this connection “greenshoe options” or opt-out clauses agreed upon for certain circumstances may also serve the purpose of equal risk distribution.

The Private Placement

At a private placement the newly created stock of a company is not offered to the public, but exclusively to a selected circle of investors. The banks and the company jointly will systematically approach potential investors whom they are in permanent intensive contact with. As a rule, these will be institutional investors or major investors.

This form of placement is an option, for example, for smaller domestic issues. Above all, the advantage lies in the fact that pursuant to the provisions of the Regulation (EU) 2017/1129 the company will be relieved from the obligation to draw-up and publish a securities prospectus for an offering which is directed to less than 150 investors in each state of the European Economic Area. This will save both costs and time.

The introduction at the stock exchange will also be possible in the course of a private placement, if all other requirements for admitting the stock to trading, especially the requirements regarding the stock in free float, have been met and an approved securities prospectus has been published. In this connection, a private placement may also be considered as supplement to a domestic public placement. This may grant the option to sell part of the securities internationally without having to bear with the international regulations for offerings, like the respective prospectus publishing requirements.

Contact Person

Issuer Hotline

Telephone: +49-(0) 69-2 11-1 88 88

Fax: +49-(0) 69-2 11-1 43 33

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