Back in autumn 1999, I was approached by the chief executive of a recruitment company. Not an unusual occurrence in today’s market you might think, but this was not any old recruitment company. This was the company that had advertised the first online recruitment vacancy for a lawyer in the UK with a £1m package attached.
In this instance, however, the CEO was concerned less with the price on my head than with my ability to help take the company, StepStone ASA, to market in the early months of 2000.
Clearly, this was not to be a typical London Stock Exchange IPO. Stepstone is a thriving online Norwegian company. Its CEO, Giles Clarke, is a successful British entrepreneur who has co-founded and been chairman and CEO of a number of well-known companies, notably Majestic Wine and Pet City, so his move into the new economy was always going to be a high profile one.
What is more, finance was to be raised by an international institutional fundraising, incorporating a Rule 144A placing in the US, retail offers via the internet in the UK and Norway, and a priority offer throughout Europe.
Although incorporated in Norway, the business had moved fast to establish a Europe-wide presence, having acquired or established businesses in the UK, Sweden, Denmark, Germany, France, Italy and Belgium.
Following a review of the various capital market options it was decided that StepStone would apply for a primary listing on the main list of the Oslo Stock Exchange and a secondary listing on the Official List of the London Stock Exchange.
Despite the fact that the company was not seeking a primary listing in the UK, it rapidly became clear that the London Stock Exchange requirements for listing would be more prescriptive than those of the Oslo Stock Exchange.
Although the company’s primary listing would be in Norway, the company would, because of its trading history, be required to comply with the majority of the new chapter 25 listing rules of the London Stock Exchange.
As a result, the company’s prospectus became something of a hybrid, designed to comply in full with both the rules of the Oslo Stock Exchange and the London Stock Exchange.
Furthermore, as there was to be a Rule 144A placing, the prospectus would also need to contain appropriate material to satisfy US disclosure requirements.
As with many e-commerce companies yet to show a profit, one of the earliest issues to surface concerned the company’s non-financial operating data. StepStone was keen not only to demonstrate the recent growth in its revenues, but also to identify key non-financial operating statistics to provide further measures of growth.
Debate centred around which of the company’s operating statistics should be published in the prospectus, as the new Chapter 25 of the London Stock Exchange listing rules would require this data to be reported in subsequent interim and annual reports published by the company.
The institutional offer was structured by way of a book-building process, marketed off the back of a prospectus containing an initial price range for the offer.
In addition, it was decided there would be a retail offer that would only be effected via a special purpose website to be hosted by Interactive Investor. Agreeing the obligations of Interactive Investor and satisfying the associated regulatory issues, particularly under Norwegian law, became a fairly complex exercise.
One of the features of the internet retail offer was its ability to notify price range changes to applicants by e-mail. Inevitably, there were a few disappointments, with some applicants experiencing difficulties in accessing their
e-mail or the offering website in time to re-confirm their interest at the revised price range but, overall, the retail offer proved to be a success.
The settlement arrangements for UK shareholders provided a further layer of complexity. It is not currently possible to settle share trades in Norwegian companies through the settlement system, Crest. Equally, every shareholder in a Norwegian company is required to have a
Norwegian VPS account. In order to facilitate the holding of shares outside Norway, it was arranged for the company’s UK registrar to act as nominee for the company’s UK shareholders and to issue receipts for their shares that could be traded.
In the final event, the offer was more than 20 times over-subscribed on an institutional basis, with strong retail interest in both the UK and Norway.
The value of the company at the final offer price was more than £500m, making it one of the largest flotations of an internet company in the UK and the largest IPO of a Norwegian company to date.
The company was advised by Osborne Clarke OWA on English law, Cleary Gottlieb Steen & Hamilton together with Dorsey & Whitney on US issues and by Advokatfirmaet Schjodt on Norwegian law.
Morgan Stanley Dean Witter was appointed as sponsor and to manage the fundraising, advised by Linklaters & Alliance on English and US law, with Wiersholm Mellbye & Bech advising on Norwegian law.
In addition, specialist advice was sought from within the relevant European jurisdictions.
Tim Birt is a London-based corporate partner at Osborne Clarke.
