ABSTRACT
Chapter 7 analyses the equity underwriting process including the initial public offering (IPO) process, regulatory and listing requirements. Raising capital for companies is at the core of investment banking. Companies raise capital through issuing of bonds, equity and quasi-equity. Raising equity capital comes in a variety of ways: IPOs, flotations, rights issues, and private placement. Since 2000, there has been significant growth in the Nigerian primary capital market as major domestic companies became publicly listed and with impetus from the bank consolidation. The impressive growth in equity primary market notwithstanding, there are still few publicly listed companies on The Nigerian Stock Exchange which are less than 5 percent of the estimated registered public limited companies in Nigeria. For a long time, rights issues were undertaken on a fixed price which was determined sometimes without reference to market appetite. A book-building rules system was introduced in 2008 which provided for more market-led pricing of public issues. At least 80 percent of all public issues were required to be underwritten on a firm basis, although the market appears to favour discretionary underwriting. Transaction costs were higher relative to emerging markets, which deter access to the primary market.
