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Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

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Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

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Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

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Plans & Membership

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Expert led content

+1,000 expert presented, on-demand video modules

Learning analytics

Keep track of learning progress with our comprehensive data

Interactive learning

Engage with our video hotspots and knowledge check-ins

Testing & certification

Gain CPD / CPE credits and professional certification

Managed learning

Build, scale and manage your organisation’s learning

Integrations

Connect Finance Unlocked to your current platform

Featured Content

More featured content

Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

More featured content

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Equity Dilution, Pre-Emption and Underwriting

Equity Dilution, Pre-Emption and Underwriting

Rupert Walford

25 years: Capital markets

With a focus on the UK market, Rupert explains the main equity capital raising options that are available to companies that are listed. In this video he also explains key concepts which are frequently used in the equity capital markets.

With a focus on the UK market, Rupert explains the main equity capital raising options that are available to companies that are listed. In this video he also explains key concepts which are frequently used in the equity capital markets.

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Equity Dilution, Pre-Emption and Underwriting

4 mins 56 secs

Key learning objectives:

  • Identify the key terminology used in the equity capital markets

  • Define Pre-emption requirements

  • Define Underwriting

  • Describe dilution and why shareholders care about it

Overview:

The equity capital market (ECM) is where financial markets help businesses collect capital and where securities are traded. They are riskier than debt markets and, thus, also provide potentially higher returns.

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Summary

What is dilution?

If a company issues additional shares - that is, it adds to its share capital - the total number of outstanding (or issued) shares increases. This can have a "dilution" impact on a current shareholder-the percentage of ownership reflected by their shareholding would decrease.

Why is Pre-emption required?

They are required to offer shareholders the right to participate in issues of shares to avoid being diluted. In certain jurisdictions, there are limitations on the discount that new shares can be issued as another way to mitigate the dilutive impact of new share issues.

These rights and requirements are enshrined into the listing rules applicable to stock exchanges located in those countries. The ​rules usually also permit the issuance of up to a small percentage of a Company’s existing share capital (say, 5 or 10 per cent) without being required to offer pre-emption rights to existing shareholders.

What is Underwriting for equity capital raising?

Underwriting for equity capital raising is where investment banks (or sometimes investors) agree to acquire the issuer’s shares at a particular price. This is useful where an issuer requires certainty that it will be able to raise a minimum amount of funding.

What are the types of Underwriting?

  • Hard Underwriting - It is where the underwriters agree prior to the launch of the transaction to purchase any unsold shares, come what may.
  • Soft Underwriting - It is where the underwriters only agree to purchase unsold shares once a book of demand has been established for the equity raise.

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Rupert Walford

Rupert Walford

Rupert has over 25 years of experience in the financial services industry working mainly in international capital markets. He is currently a Managing Director at RBC Capital Markets in London responsible for ECM Execution and Healthcare ECM and Corporate Broking in Europe. Rupert was previously at Linklaters for 8 years, at UBS Investment Bank for 9 years as Head of Global Capital Markets Legal and as a member of UBS's ECM Execution team and subsequently at Deutsche Bank in Compliance covering ECM and Corporate Broking. Rupert has extensive experience in a wide range of investment banking transactions in EMEA, predominantly in the emerging markets and in particular Russia. He is also a qualified lawyer.

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