Allowing unconnected analysts to participate in the IPO process: AFME / Euro IRP publishes guidance

The Association for Financial Markets in Europe (AFME) and the European Association for Independent Research Providers (Euro IRP) have published guidance on how unconnected analysts can participate in the IPO process and access information on prospective issuers. The guidance is primarily designed to help investment banks comply with new Conduct of Business rules introduced on 1 July this year that are designed to ensure that on a Main Market IPO investors have access to a range of views beyond those of analysts working in the research divisions of the investment bank(s) who are acting on the IPO. Both connected and unconnected analysts will have to be provided with the same information on the issuer, but this can be done either by permitting unconnected analysts to participate in meetings and calls with management alongside connected analysts or, more likely, via separate meetings and calls.

The Guidance recommends that unconnected analysts who wish to communicate with the issuer’s management team should agree to comply with the Market Standard Research Guidelines set out in Appendix I to the Guidance. Among other things, unconnected analysts will have to agree not to publish their research until the dates that connected analysts are permitted to publish their research, and use reasonable endeavours to publish their research prior to the publication of the price range prospectus or, in the case of a tripartite prospectus, the securities note and summary. For their part, the investment bank(s) acting on the IPO will need to decide how many unconnected analysts should be given the opportunity to write research on the issuer and how they should be permitted to participate.

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