How To Make Your IPO More Efficient and Effective: IPO Guide of The Swiss Stock Exchange

How to Make Your IPO
More Efficient and Effective

IPO Guide of the Swiss Stock Exchange
Contents
Contents
Contents
P.05 Foreword5
Foreword The Importance of the Financial Sector 7
Raising Capital Efficiently for a Successful IPO 8
P.07–P.13 Reasons to Go Public 11
Prerequisites for a Successful IPO 12

Financial Strength as
the Basis for Raising An IPO Requires Professional Partners 15
Capital Efficiently
Phases of the IPO Process 18
Listing Without Placement of Shares 24
P.15–P.33 Underwriting Agreement and Offering/Listing Prospectus 26
Strong Partners Provide Selected Aspects Relating to Financial Reporting 29

Peace of Mind
The Equity Story – the Core of Investor Relations 31
Listing Requirements 35
P.35–P.49 After-Market and the Importance of Research 39
Investors’ Expectations of Listed Companies 41

It’s the Little Things
That Set Us Apart – Capital Increases in Switzerland 43
Lots of Them
Case Study: Glarner Kantonalbank 45
Case Study: Investis Holding SA 47

P.51–P.54 IPO Checklist 51
Solution-Oriented in
Selected IPO Partners 53
Every Situation
03
Foreword
Foreword
Welcome to the
Swiss Financial Center
According to the World Economic Forum, Switzerland The decision to go public is one of the most significant
has been one of the world’s most competitive economies decisions a company can take. The sheer number of
for several years. It has also occupied a top spot in the aspects that need to be taken into account in this
heart of Europe in terms of innovation and political and context may make going public seem challenging. We
economic stability for decades. firmly believe that you can succeed in this undertaking
with the right partners at your side.
Switzerland’s appeal is, however, not based on just a few
but rather a large number of different success factors It was very important to us to issue this IPO Guide in
that feed into each other. Attractive factors such as partnership with IPO experts who have extensive
business-friendly framework conditions, easy access to experience in the Swiss capital market. This IPO Guide
official institutions and highly qualified workforce are gives you an overview of the success factors, the
also beneficial to Switzerland’s financial center and lay most important phases and measures to ensure a
the foundation for a well-functioning and internationally successful IPO.
recognized capital market.
We hope you have an efficient IPO and are able to
An international capital market with a strong stock successfully raise capital on the Swiss stock exchange.
exchange that offers transparent, fair and liquid trading
as well as efficient access to capital is important in order
to finance your growth and successfully implement your Thomas Zeeb
strategy in the long-term. The Swiss stock exchange Head Securities & Exchanges
is one of the most important exchanges in Europe and Member of the Executive Board, SIX
a cornerstone of Switzerland’s financial center. With
market-oriented regulation, client-friendly services and
a network of strong partners, we offer the ideal condi-
tions for raising capital in order to support continuous
success.
“ The Swiss Stock Exchange Is One

of the Most Important in Europe.
”
05
Herausragende Bedeutung des Finanzsektors
Financial Strength
as the Basis
For Raising Capital
Efficiently
The Importance of the Financial Sector
The Importance
of the Financial Sector
Switzerland is one of the world’s leading financial period that included the global financial crisis, the tax
centers. The financial sector, which is concentrated dispute with the US, and a great deal of changes and
in Zurich and Geneva, is of exceptional economic restructuring in the world of banking. While the value
importance to the whole country. Banks and insur- added for banks fell slightly, the proportion accounted
ance providers make a significant contribution to for by insurance providers has risen sharply, allowing
Switzerland’s prosperity. the sector to remain strong and competitive despite all
of the challenges it has faced.
The financial sector is a cornerstone of Switzerland’s
economy – be it asset management, lending or the Fit for the Challenges of the Future
hedging of financial risks. It makes an important and Looking back, the Swiss financial sector appears enviably
direct contribution to generating value, employment resistant to crisis and also adaptable. What is needed
and tax revenue. It also creates persistent demand for now are framework conditions for the financial center
upstream services from companies in other sectors such that allow it to remain successful in the future. Banks
as consultancy, IT services and auditing. and insurance providers face particularly significant
challenges in connection with the persistence of low
The financial sector, which directly employs around interest rates, strong international competition with
213,000 people, accounts for roughly 9% of the total substantial pressure on margins, digitalization and
value created by the Swiss economy and pays around changes in Europe following the UK’s withdrawal from
8% of the total federal, cantonal and municipal tax the EU.
r evenue. One in ten people working in Switzerland
generate their income in this sector. The productivity of The fact that the Swiss government is working with
the financial sector is about 150% of the average for the representatives of business and academia in order to
economy in general. develop the financial center is therefore to be welcomed.
At the same time, it is important not to lose sight of
Strong Capacity to Adapt and Create Value the purpose of these efforts: avoiding unnecessary
The Swiss financial center is highly dynamic and a global regulation and working to ensure that the financial
leader in many lines of business. It has clearly demon- center remains fit for the challenges of the future.
strated its adaptability in the last ten years. In 2005, the
gross value added for banks and insurance providers was
around CHF 58 billion, rising to roughly CHF 60 billion in Monika Rühl, Chairwoman of the Executive Board
2017. The number of full-time jobs also rose between economiesuisse
2005 and 2017, from 189,000 to 213,000. This was a
“ The Financial Sector
”
Is a Cornerstone
of the Swiss Economy.
07
Raising Capital Efficiently for a Successful IPO
Raising Capital Efficiently

for a Successful IPO
As one of the most important exchanges in Europe, Added Value of Listing on the Swiss Stock Exchange
the Swiss stock exchange offers an attractive inter- In addition to the benefits of Switzerland as a location
national listing venue as well as comprehensive and the reputation and importance of the financial center,
services both prior to and after listing. Companies the Swiss stock exchange offers a number of specific
benefit from an efficient IPO process and gain access advantages.
to Swiss and international investors with sizeable
amount of capital as well as a high level of visibility. Access to Substantial Pools of Capital
Switzerland has around 480 banks and insurance pro-
Switzerland is viewed around the world as being politi- viders, as well as more than 1,800 pension funds. With a
cally, economically and socially stable. According to the market share of 24% in 2017, Switzerland plays a leading
World Economic Forum it has been one of the world’s role in the international private wealth business.
most competitive economies for several years and is
known globally for exceptionally high living standards. A listing on the Swiss stock exchange provides access
to experienced Swiss and international investors with
Switzerland’s financial center is also very appealing for sizeable amount of capital. Listing on the Swiss stock
domestic and foreign companies seeking capital. It exchange also provides companies access to a broad
occupies a leading position in the world, stands out on range of institutional investors, whose investment poli-
account of its innovation, stability and security, and its cies often only allow them to hold equity securities in
banks offer substantial placement resources. listed companies.
The Swiss Stock Exchange – a Strong Network High Visibility

As one of the most important European exchanges, the By going public on a market with a high level of visibility
Swiss stock exchange offers an attractive international like the Swiss stock exchange, a company can make a
listing venue, a highly modern market infrastructure and clear stand for transparency. Like being included in inter-
comprehensive services both prior to and after listing. nationally recognized indexes, which inspires confidence
and raises the company’s profile among investors.
We are one of Europe’s biggest exchanges in terms of the
market capitalization (free float) of our listed companies. Another strength of Switzerland’s financial center is the
These include Nestlé, Novartis and Roche, three of the presence of a large number of international financial
five European stocks with the biggest market capitaliza- institutions with expert analysis departments. This
tion. Our customer base comprises a wide range of listed ensures good coverage by various research studies
companies, issuers of financial products and trading and attracts constant attention from investors and
members. the media.
08
International Standards, Strict yet Market-Oriented Our various platforms for issuers are aimed to help
The regulatory requirements of the Swiss stock exchange making your being public simple and focused. These
meet the strictest international standards. Thanks to include workshops for listed companies, as well as infor-
the self-regulation enshrined in Switzerland’s financial mation and networking events like the annual SIX Inves-
market legislation, however, they are also market-oriented tor Relations Conference. You can also use these events
and enable an efficient listing process and therefore the to establish new contacts or maintain existing business
easy raising of capital by means of an IPO. relationships.
Admission Process: Fast and Uncomplicated In 2016, SIX launched the Stage Program; a s ervice
Time-to-market is an important criterion for a successful aimed at helping small and medium-sized enterprises
IPO. In order to account for this requirement in the best raise their profile on the capital market. The service
possible way, SIX Exchange Regulation 1 has a team that includes research by one or more established banks.
checks listing applications and is open to provide
s upport to consultants (recognized representatives). IPOs on the Swiss Stock Exchange –
They can also be consulted at any time for assistance Varied and Successful
with interpreting the Listing Rules or other matters. This More than 130 companies have opted to list on the Swiss
means that a listing can be completed in just four weeks. stock exchange since 2000, thanks in no small part to
this wide range of benefits. The average market capital-
Support Through Personal Assistance ization of these companies based on the closing price on
and First-Class Services the first day of trading was around CHF 1.3 billion, with
The SIX Primary Markets team also offers issuers com- the average transaction volume (including the green-
prehensive services on the day of and after the IPO. We shoe option) amounting to almost CHF 300 million.
will assist you with the marketing of the IPO and, should
you wish, with the organization of a press conference in These figures cover a wide range of companies, varying
the premises of the Swiss stock exchange immediately in size and sector. The smallest IPO since 2000 had a
after the IPO. Traditionally, the conclusion of the trans- transaction volume of CHF 18 million for a market capi-
action and the IPO are celebrated by the company’s talization just under CHF 40 million. The biggest had a
management ringing in the trading of the new issuer’s volume of around CHF 3.3 billion.
shares, followed by brunch.
1
SIX Exchange Regulation is responsible for approving securities for trading
and for listing on the Swiss stock exchange.
09
Around a third of the listings on the Swiss stock exchange

were pure listings with no capital raised, which are seen The Swiss Stock Exchange – Gateway to the
more often in more volatile times. These also include the International Capital Market
biggest listing in terms of market capitalization (Trans The Swiss stock exchange is one of the most impor-
ocean), with a volume of CHF 32.9 billion. tant exchanges in Europe. We connect companies
from around the world with international investors
Companies from a wide range of sectors have opted to and traders, and create particularly market-oriented
list on the Swiss stock exchange. The exchange’s sector framework conditions for listing and trading in our
clusters such as Life Sciences, Financial Securities, Real highly liquid product segments. The Swiss stock
Estate or High Technology can be a major positive factor exchange is an ideal listing venue for companies of
in the decision regarding the choice of a listing venue. any origin, size and sector. We maintain a close dialog
with both our domestic and foreign customers, work-
ing intensively with them to create optimal conditions
Valeria Ceccarelli for their success. We also help them access a strong
Head Primary Markets global network.
Securities & Exchanges, SIX
The Swiss stock exchange is part of SIX and offers
services that are first-class in an international
comparison in the fields of securities listing, trading,
clearing and processing, as well as financial informa-
tion and payments.
Your Benefits at a Glance:

– A leading global financial center
– International investors with a sizeable amount
of capital
– Strong placement resources of local banks
– Efficient raising of capital thanks to extensive
professional network and personal support
– First-class services and fast listing process
– Targeted information packages
– Strong presence among investors,
analysts and media
– Access to an extensive network of stakeholders
10
Reasons to Go Public
Reasons to Go Public
There are many different reasons to go public, includ- Structure of Ownership and Control
ing a need for capital, the desire of a major share- – Reduction of investment by or departure of one
holder to cut ties and raising a company’s profile. In or more investors; possible medium-term
most cases, the decision to go public is based on a succession arrangement
combination of different factors. – Broadening or diversifying the group of shareholders
– Investment opportunity for management,
An IPO opens up a private company that had previously employees, customers, the general public (in the
been controlled by one or more shareholders to a wider case of privatizations) or other stakeholders
group of investors. The shares are listed on the Swiss
stock exchange and new shares are issued (primary Publicity and Governance
shares), and/or existing shares are sold by existing – Publicity effect, raising of profile
shareholders to new investors (secondary shares). As – Research coverage by banks, increased
part of a book building process, the shares to be placed transparency
are offered publicly by a consortium of banks on behalf – Publication requirements improve the availability
of the issuer and/or the selling shareholders. of information and boost efficiency
(reduced monitoring activities for owners)
There are many different reasons for going public, and – Ease of trading: there is very rarely a market for
they can essentially be divided into three categories: unlisted equities
– Easier recruitment of new key personnel or
Finance and Balance Sheet Structure employees in general
– Additional capital required for organic growth, which
cannot or is not intended to be covered by existing When primary shares are placed, the company receives
shareholders or internal financing the proceeds, the intended purpose of which is described
– Capital required for external growth (acquisitions) in the listing prospectus. An analysis of the listing pro-
– Shares as an acquisition currency for takeovers spectuses for IPOs involving the placement of primary
(instead of or alongside cash payments) shares on the Swiss stock exchange since 2006 under-
– Improved access to the capital market for scores the aforementioned reasons for going public. The
pending rounds of financing purposes most often cited for use of the proceeds are:
– Reducing debt capital or bolstering the equity ratio – Organic growth
– External growth/acquisitions
– Reducing debt capital/repaying liabilities to banks
or bridge financing
– Financing general business activities
Dr. Andreas Neumann, Head Equity Capital Markets and

Tobias Bertschinger, Equity Capital Markets
Zürcher Kantonalbank
11
Prerequisites for a Successful IPO
The success of an IPO depends on a range of factors. Not only does it eliminate market value, it also results
In addition to answering the fundamental question of in a massive loss of confidence among investors from
why a company is seeking to go public, an objective which companies generally only recover from slowly
analysis of the company’s status quo is required. The and with difficulty.
prerequisites described below are to be considered
against the backdrop of regulatory requirements, Specific Use of Proceeds
investors’ expectations and general conditions in the In order for an IPO to be successful, the proposed use
capital market. of the proceeds from the IPO must be clearly set out.
Investors are generally critical of raising funds “for the
Attractive Investment Case future”, and it is not recommended. The situation is
The investment case describes the main attributes similar for the sale of existing shares by established
supporting an investment in the company as part of the investors, in which case the funds go to the previous
IPO. This makes it the central element of any IPO. Ideal shareholders rather than the company itself. In this
attributes for an IPO could include, for example, a leading case, convincing argumentation is required for why
position in an attractive market, attractive prospects for established investors, as insiders, want to sell their
growth or as a yield investment, substantial barriers to shares. For more risky investment cases, established
market entry or advantages over competitors, sustaina- investors are in fact expected to inject additional capi-
ble profitability and cash flow generation, or experienced tal as part of the IPO as a sign of confidence (insider
management. participation).
Realistic Proposed Valuations in Relation Capitalization and Tradability

to Comparable Alternative Investments of Securities (Liquidity)
No matter how good an investment opportunity is, it For many investors, tradability (a stock’s “liquidity”) is a
becomes less appealing for investors if they consider key factor in their investment decisions. The liquidity
the requested purchase price to have too little or no inherent in a security is directly linked to the company’s
potential for increased value, or if there is a comparable, market capitalization and the proportion of the shares in
established investment opportunity with a more favora- free float. The lower the market capitalization, the more
ble risk/return profile available. Realistic proposed valu- investors focus on the free float. A free float of at least
ations are therefore a key requirement for a successful 20% of share capital is required on the day of the initial
IPO. Established owners, companies and new investors listing. Investors generally want a higher share of free
benefit in equal measure from a price increase following float, however, in order to be able to liquidate their
a listing. Any new company coming onto the market must shares, if necessary, without influencing the share price.
first gain the confidence of investors. A rapid drop in price The proportion of free float must not be underestimated
following an IPO is therefore doubly counter-productive. as a factor in the success of an IPO.
12
Professional Corporate Governance Confirmation of Expectations

and Organization Following the IPO
An efficient organizational and legal structure as well as The success of an IPO cannot be judged purely on the
good corporate governance are important cornerstones basis of the initial listing. A price increase in the first
of a successful IPO. The impartiality of board of directors weeks and months after the IPO, ongoing compliance
members (representing third parties) is crucial in order to with the stock exchange’s regulations and the utilization
engender confidence on the capital market. Professional of proceeds for the proposed use are examples that
financial reporting also falls under this topic. Appointing show that the success of an IPO goes beyond the day of
a respected auditing firm is another bonus in the eyes of the initial listing. The ability and desire to communi-
investors. These professional structures must be put in cate, and the maintenance of relationships with inves-
place by the company when preparing for going public tors and banks that publish independent equity research
at the latest. on the company, are also important factors for the pos-
itive perception of an IPO.
Targeted Resource Planning
and Coordination
An IPO is an important milestone in a company’s devel- Friedrich Dietz (MD), Kalina Scott (MD),
opment. The route to the market is more of a marathon Marius Zuberbühler (MD) and
than a sprint. The preparation phase, from the kick-off Lukas Keuerleber (Associate), Formerly Corporate
to the first day of trading, typically lasts between four Finance Team of Bank am Bellevue
and six months. The project occupies a significant por-
tion of a company’s management resources during the
preparation phase. The management is also supported
in this process by various third parties such as syndi-
cate banks, lawyers, auditors and PR consultants. It is
important to give careful thought to the selection and
coordination of these third parties in order to create a
focused and efficient project working group in partner-
ship with the company and its shareholders. The high
priority of the IPO project should be reflected in the
commitment of all parties.
“ An IPO Is an Important
”
Milestone in a
Company’s Development.
13
Strong Partners
Provide
Peace of Mind
An IPO Requires Professional Partners
An IPO Requires
Professional Partners
A company needs professional partners that can The pricing of the shares to be placed and the subse-
make a significant contribution to a successful IPO. quent placement are usually carried out by means of a
Choosing the right partners is key. The partners book building process. Lead managers are chosen based
involved include the lead manager, the consortium on a variety of criteria:
of banks, IPO consultants, lawyers, auditing firms, – Experience in IPOs
investor relations agencies and the stock exchange. – Knowledge of the financial industry
– Issue strategy (national/international)
All of the relevant negotiations should be conducted by – Quality and number of investor contacts
an experienced project team from the very beginning (placement capacity)
and each task must be clearly defined. When putting – Quality of equity research
together the team of consultants it is important to make – Voluntary market-making following the IPO
sure that at least one party is recognized as an expert – Supporting and advising the company following
representative of the issuer as prescribed by Art. 43 of the IPO
the Listing Rules. – Issuance performance and costs
– Existing relationships with an investment bank
The Lead Manager and the Consortium of Banks
IPO candidates usually engage a lead manager who Lawyers
acts as the main party in connection with the placement Lawyers are a company’s indispensable partners during
of shares. The lead manager proposes the other mem- the IPO process, as transaction lawyers and legal con-
bers of the consortium and appoints them with the com- sultants. They are also necessary as strong partners
pany’s approval. The lead manager leads the consortium for the lead manager. Lawyers have two main tasks in
and coordinates the entire IPO process. At the end of the connection with an IPO:
process the lead manager allocates the shares to the
other consortium members and investors. Legal Due Diligence
This kind of due diligence comprises a legal appraisal of
The responsibilities of the lead manager and the consor- the company (contracts, capital increases, intangible
tium of banks include, among others, validating the rights, etc.). During this process legal risks should be
business plan and carrying out a valuation of the com- identified, documented in the issue and listing prospec-
pany. They carry out due diligence and draft the specific tus, and tested in conjunction with the lead manager
investment case for the investors. They also structure based on legal (technical and disclosure) opinions.
the offer, prepare research reports and market the
investment case to investors. Finally, the lead manager
and the consortium place the shares with interested
investors.
15
Prospectus The issuer must meet the requirements of the Swiss

Lawyers usually work with other consultants to draft the Federal Act on the Admission and Oversight of Auditors
prospectus used in connection with the IPO. Liability for when appointing and during the continued engagement
the information contained in the prospectus means that of the audit firm. The law stipulates that only audit firms
all of the notices issued by the company or other parties approved and regulated by the Swiss Federal Audit
involved in the transaction must be subjected to a legal Supervisory Authority (RAB) may provide services for
review. The following criteria should be taken into account the purposes of listing. The auditors for foreign issuers
when choosing a lawyer: are exempt from the RAB’s approval and oversight pro-
– Expertise/reputation vided they are regulated by a foreign audit supervisory
– Experience of transactions authority that is recognized by the Swiss Federal Council.
– Range of services and fees in If this is not the case, the foreign issuer’s auditors must
connection with an IPO be approved and regulated by the RAB in Switzerland.
– Support and advice in connection with listing
– Existing relationships with law firms Investor Relations Agencies
Before, during and also after an IPO, as a listed company,
IPO Consultants it can be beneficial to consult experienced financial com-
Independent IPO consultants can help companies pre- munications experts who support the entire communi-
pare for an IPO well in advance. They can also offer cations process. The agency is responsible for handling
impartial recommendations for choosing advisors, the all matters relating to capital market communications
valuation of the company and the auditing of corporate requirements. It helps clarify the company’s profile and
governance structures. raise awareness of it on the market. It can also help
organize conferences for analysts and the media, and
Audit Firms handle communications with investors, shareholders,
Audited annual financial statements for a company’s last analysts and the financial media. The following criteria
three fiscal years and unaudited interim financial state- should be applied when selecting an investor relations
ments are generally required for an IPO. The auditors agency:
work with the company to establish whether interim – Experience with the capital market/recommendations
financial statements are required in addition to the – Experience in IPOs
audited financial information. As part of its due diligence, – Comprehensive range of services offered
the consortium of banks requires a “comfort letter” from – Good contacts within financial industry (analysts,
the audit firm. This audit certificate is usually updated investors and financial media)
by means of a “bring-down letter” when the lead man- – A presence in international financial centers
ager transfers the funds raised through the IPO to the – Support for listed companies
company. – Corporate reporting
16
SIX – a Reliable Partner The following documents must be submitted together

SIX provides support to companies throughout the with the application:
entire IPO process. Companies can arrange an informal – Listing prospectus
meeting with the SIX Primary Markets team if they wish, – Official notification
in order to get to know the market landscape and get an – A statement from the issuer regarding the printing
understanding of what is expected of them during an of equity securities or proof of ownership
IPO. SIX is a reliable partner throughout the IPO process of book-entry securities
and assists companies with any questions they have in – Excerpt from the commercial register
relation to listing on the stock exchange. – Articles of association
– Proof of compliance with the Audit Oversight Act
Once the team of consultants for the IPO has been – Statement from the lead manager regarding the free
finalized, a kick-off meeting is held at the Swiss stock float in accordance with Art. 19 of the Listing Rules
exchange. At this official meeting with SIX Exchange – Statement from the issuer pursuant to Art. 45 of the
Regulation, the team discuss the intended transaction, Listing Rules and declaration of consent
the financial data and other points that may be of inter-
est (such as the time line and exceptions from the Listing The listing application is checked by SIX Exchange Regu-
Rules) with the company. The listing application must lation, which drafts an application (with recommendation)
then be submitted in writing by a representative recog- to the Issuer Committee. The Issuer Committee is part of
nized by SIX Exchange Regulation. It may be written in the Regulatory Board, which is responsible for setting
English, German, French or Italian. The application must the group’s rules. Its responsibilities include enacting
be submitted to SIX Exchange Regulation at least rules for issuers (regulations and directives) and partici-
20 trading days prior to the intended date of listing. It pants (trading rules and directives).
must include a brief description of the transaction
and an application pertaining to the intended first day
of trading. Valeria Ceccarelli
Head Primary Markets
Securities & Exchanges, SIX
“ SIX Is a Reliable Partner

Throughout the IPO Process.
”
17
Phases of the IPO Process
The IPO process can be divided into three phases. depend to a large extent on factors such as the compa-
During the preparation phase, all relevant clarifica- ny’s business model (business case) and structure, posi-
tions are made and the company is prepared for going tioning among new investors, the funds required and
public. In the subsequent marketing and implemen- the intentions of existing shareholders. It is therefore
tation phase the intention to go public is announced, not uncommon for companies to restructure in prepara-
the search for investors begins and the phase ends tion for an IPO. Common issues relate, for example, to
with the setting of the price and the start of trading. the company’s domicile, decisions regarding financial
Other tasks that arise immediately after the IPO fall reporting standards (including Swiss GAAP FER, IFRS or
under the follow-up phase. US GAAP) and the choice of stock exchange or stock
exchange segment. An initial estimated valuation is
The most important tasks and events during the three also prepared without the involvement of the research
phases are discussed below. analysts who will write the IPO report later on.
Preparation Phase Once the engagements have been agreed and initial
An IPO entails significant changes for most companies. deliberations have been carried out, a kick-off meeting
Companies that had previously been in private hands are is held with all involved parties. A time line featuring
suddenly subject to a wide range of regulations and must important milestones is defined at the meeting. One
satisfy the critical demands of professional investors. An factor that requires consideration is the timing of the
IPO can only succeed with support from experienced first day of trading. The periods immediately following
partners and the best possible planning of processes. the publication of financial data (i.e. between March and
The lead bank makes an essential contribution to achiev- May or from September to November) are ideal. Follow-
ing the most important goals. These include successfully ing the kick-off, various different work streams run in
positioning the company as an investment case, a parallel under the coordination of the lead bank. Since
high-quality shareholder group, an appropriate place- the volume to be placed is usually in the hundreds of
ment price and a stable market for the placed shares millions (tens or thousands of millions are more of a
that is as liquid as possible. rarity on the Swiss stock exchange), additional banks are
engaged as syndicate partners. The banks help place
At the start of the preparation phase, a rough concept the shares within their network of investors and provide
is drawn up and the relevant external parties such as additional appraisals prepared by their analysts. The
the lead bank, lawyers, auditors and investor relations additional analyst opinions support the credibility of the
agency are determined or engaged. It is essential to subsequent valuation.
engage specialists at an early stage because they offer
recommendations on how to structure the transaction
following an in-depth analysis of the financial and legal
aspects. The implementation and success of the IPO
18
Investment Case principle and what they particularly like about the
The investment case is drawn up as a key foundation. It investment case. More critical investors are asked what
must be possible to inspire interest and enthusiasm other factors would need to be in place for them to be
among investors regarding the IPO candidate based on interested in an investment. Initial ideas for prices (for
the company’s business model and USPs. Is it a growth example, multiples such as EV/EBITDA or P/E) are also
story with significant upside potential for the price? Or is usually obtained.
the business model more conservative, suggesting an
attractive dividend yield? Why should anyone invest in Pilot fishing allows an early assessment of success to be
this company in particular, rather than a company with a made. If investors’ responses are more on the negative
similar business model that is already listed? The success side, targeted amendments are made to the investment
of the IPO depends to a large extent on the quality and case and transaction structure based on the feedback
credibility of the investment case, and it should therefore received. At this point an IPO can be postponed or even
be treated as a priority. (in rare cases) cancelled if the investors do not express
enough interest or the conditions on the market are
Pilot Fishing unfavorable.
Initial appraisals are obtained from larger investors on a
confidential basis during the preparation phase. In this
process, which is known as “pilot fishing”, investors are
asked whether they can imagine the company’s IPO in
IPO Process
Preparation Phase Marketing and Implementation Phase Follow-Up Phase
– Readiness check – Intention to float – Stabilization phase

– Possible legal structuring – Investor education – Potential exercise of over-allotment
– Possible switch to new financial – Investor feedback option
reporting standard – Listing prospectus – Recurring obligations
– Corporate governance structures – Valuation range – Event-driven obligations
– Engagement of lead bank and other – Roadshow – Investor relations
partners – Book building – Communication with the media and
– Kick-off meeting – Price setting analysts
– Rough concept and time line – Allotment of shares – Subsequent transactions: capital
– Investment case – Final prospectus including supplement increases, bonds, return of funds,
– Pilot fishing – Start of trading etc.
– Due diligence – Payment under subscription
– Valuations
– IPO research reports prepared by
analysts
– Listing application
19
Due Diligence and Listing Prospectus Other Aspects of the Preparation Phase
During the due diligence the company is examined with During the preparation phase, the company should set
a focus on business-, financial-, legal- and tax-related up an internal investor and media relations team or
risks. The relevant findings are presented as risk factors outsource the task to a specialized investor relations
in a listing prospectus together with other information agency. Functioning communications and/or maintaining
on the company and details of the transaction structure. a close dialog with investors are particularly important
This document is important in connection with the IPO during and after the IPO. The team handles issues for
because it provides information to investors and both existing and potential investors, and interacts with
because it is also the document that is usually used as analysts and the media.
the basis for investment decisions.
There is no clearly defined end to the preparation phase
IPO Research because various different work streams continue run-
Another important work stream comprises the assess- ning and are not completed until the subsequent phase.
ments and evaluations of research analysts, who ana- However, the marketing and implementation phase
lyze and evaluate the company independently of the starts with the publication of the intention to float.
advisory capital market teams of the banks involved.
This independence is ensured by means of “Chinese Marketing and Implementation Phase
walls” within the bank that control the flow of informa- Once the intention to float (the official announcement of
tion and ensure that analysts only receive information the planned IPO by means of a press release) has been
that is publicly available and their evaluations are not published, the attention focused on the company
influenced by the company. In addition to in-depth increases noticeably and the relevant phase begins.
analyses of the business models, the situation on the
market and competitors, analysts arrive at ranges for After potential investors have obtained preliminary infor
the fair valuation of the company based on best-practice mation from the research report, analysts present the
valuation methods such as discounted cash flow calcula- IPO candidate to interested investors during the investor
tions and/or the multiples of comparable companies. education process. Analysts maintain relationships
The resulting valuation ranges help the capital market with institutional investors and their objective opinion
team and the IPO candidate to define a price range prior regarding an IPO candidate is highly valued. Following
to the book building (please refer to the “Marketing and these presentations, the sales forces of the banks
implementation phase” section). The analysts also use involved obtain detailed feedback from the investors.
studies on the relevant sectors as a basis in addition to
the information provided by the company. The final
reports are provided to investors on the day of the
intention to float at the earliest.
20
Once the investor education is finished, the IPO candi- The book building process, i.e. filling the order books
date or selling investor sets a range for the placement with purchase offers from investors, starts during the
price (usually a middle value ±5%–10%) in partnership roadshow. The order book usually remains open for up
with the lead bank. This is not an easy task because a to ten trading days. In isolated cases the book building
balance must be struck between the interests of existing process can be terminated early due to lively interest
shareholders, the company and investors. While selling from investors.
investors and usually the companies as well tend to
prefer a higher placement price, new investors are nat- Once the book building has finished, the order book
urally interested in a favorable price. There are, how- should ideally be oversubscribed at the upper end of the
ever, other relevant factors such as the longer-term time price range. When setting the placement price, it is not
frame, any subsequent transactions or the desire for a just the absolute placement volume that is relevant –
successful IPO. It is customary, for example, for the soft factors such as the desired investor mix also play a
placement price to be an average of around 10% below role. Shares are allocated by the lead bank on the basis
the theoretical fair value (depending on the sector). One of directives issued by the Swiss Bankers Association.
of the aims of this IPO discount is to compensate inves- The allocation guidelines ensure that investor orders are
tors for their involvement, for example the feedback treated fairly and impartially.
provided during the pilot fishing process or bearing
certain risks shortly after the company goes public, and The highlight of the implementation phase for the IPO
to ensure that the price of the new company’s shares candidate comes on the first day of trading, when repre-
performs well initially on the stock market. sentatives of the company meet at the Swiss stock
exchange together with the banks, lawyers and other
Following the publication of the listing prospectus, the consultants involved, and open trading at 9 am with the
company’s management present the company to a traditional bell-ringing.
wider circle of investors by means of a roadshow. From
the start of the investor education process, analysts are The volumes traded on the first day of trading are typi-
subject to a blackout period in which they are prohibited cally high. An average of just under 20% of all placed
from publishing any financial studies or making any shares were traded on the first day of trading following
comments regarding the company for 40 calendar days IPOs on the Swiss stock exchange in the last five years.
from the start of trading. This ensures a strict separa- This can be attributed among other things to the fact
tion between research and the listing prospectus. that price reductions after trading opens lead to adjust-
ment purchases and sales.
21
IPO Timeline
Weeks 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
Kick-off
Due Diligence
Preparation of Equity Story/Business Plan
Valuation
Preparation of Listing Prospectus Submission of Prospectus to SIX Prospectus Prospectus

Preparation
S upplement
Preparation of Analyst Presentation
Information for Analysts
IPO Research Reports

Marketing and Implementation
Publication of Intention to Float
Publication of IPO Research
Investor Education/Roadshow
Specification of Price Range
Book Building Price Setting
First Day of Trading
Payment Under
Subscription
Stabilization
Follow-Up
Exercise of
Over-Allotment
Option
22
Follow-Up Phase Listed companies must also fulfill certain maintenance

The share price can be stabilized by the lead bank during obligations:
the initial phase of trading. The lead bank does this by
allocating more shares during placement than had orig- – Recurring obligations
inally been provided for in the base tranche (typically up The stock exchange’s maintenance obligations
to 15%). It technically takes a short position by lending require the publication of annual and interim financial
out securities. The lead bank may acquire the loaned statements (every six months). There is also an obli-
and additional placed shares from selling shareholders gation to issue regular reports containing technical
(secondary shares) or the company (primary shares) at and administrative information on the shares or
the placement price at a later date in order to cover the issuer. Furthermore, information is required regard-
short position. This is known as the “over-allotment” or ing corporate governance, including the composition
“greenshoe” option. of and compensation paid to the board of directors
and executive management.
Once trading has started there are two trading scenarios
for the lead manager: – Event-driven obligations
Developments with potential relevance to the
1 share price such as mergers and takeovers,
If the share price rises following the IPO, changes in profits or personnel changes in the
the lead bank exercises the call option with board of directors or executive management must
respect to the granting parties within be c ommunicated by means of ad hoc reporting.
30 calendar days in order to cover the short All stock exchange transactions conducted by the
position. Once the over-allotment option company’s management and board of directors,
has been exercised in full, up to 15% more and equity investments held by individuals or groups
shares have definitively been publicly of people that exceed or fall short of certain voting
placed than were provided for in the base rights thresholds (3%, 5%, 10%, 15%, 20%, 25%,
tranche. 331 ⁄ 3%, 50%, 662 ⁄ 3%) must also be reported and
published.
2
If the share price falls following the IPO, the This is later supplemented by analyst presentations,
lead bank can cover its short position by general shareholder meetings and potentially also
buying shares back via the stock exchange. investor conferences. The importance of the mainte-
The bank’s purchasing activities have a nance of good relations with investors by the investor
stabilizing effect. If the over-allotment option relations team or an external specialist is not to be
is not exercised, only shares from the base underestimated. The faith of investors is particularly
tranche will ultimately be publicly placed. necessary for subsequent transactions, because being
involved in the capital market opens up new opportuni-
ties for raising funds (debt and equity capital).
Dr. Andreas Neumann, Head Equity Capital Markets and

23
Listing Without Placement of Shares
Instead of a conventional IPO, companies that are Spin-offs

going public have the option to apply for listing and A company whose shares are already listed on the Swiss
admittance of their shares to trading without placing stock exchange (or have been) applies for the shares
any shares with new investors. Opting not to place of its constituent entities to be listed and admitted to
any shares means that the company’s listing can be t rading on the Swiss stock exchange. The constituent
carried out more flexibly, more affordably and irre- entities’ shares are allocated to the company’s existing
spective of conditions on the capital market. The shareholders.
absence of this liquidity event also makes it more – Practical example: Spin-off of Idorsia from Actelion
difficult to improve the quality of the investor base, (June 2017).
however, because in the absence of a placement
offer, new investors can only build up an equity posi- Reverse Merger
tion by trading. A private operating entity acquires a corporate shell, i.e.
an entity whose shares are already listed on the Swiss
Variants of Listings Without Placement of Shares stock exchange, by means of a reverse merger. The
Listings without placement offers can take many differ- private entity’s shareholders exchange their shares for
ent forms in practice: new shares in the shell corporation.
– Practical example: Reverse merger of Kuros
Direct Listing Biosciences with Cytos Biotechnology (January 2016).
A company applies for the listing and admittance of its
shares to trading on the Swiss stock exchange. Criteria for Omitting the Placement Offer
– Practical example: Listing of ASMALLWORLD The same listing standards apply to listings without
on the Swiss stock exchange (March 2018). placement of shares on the Swiss stock exchange as for
conventional IPO candidates. This means that listing
Dual Listing criteria such as the minimum free float (20%) and mini-
A company whose shares are already listed on a foreign mum market capitalization (CHF 25 million) must be met
stock exchange applies to also be listed and for its shares when the company goes public, irrespective of whether
to be admitted to trading on the Swiss stock exchange. a placement of shares is made. Only companies that
– Practical example: Dual listing of the NASDAQ-listed already meet the listing criteria, are not experiencing an
shares of ObsEva on the Swiss stock exchange acute need for equity funding and whose existing share-
(July 2018). holders do not intend to sell large blocks of shares as
part of a listing may go public without placing shares.
Relisting
A company transfers the existing listing of its shares on
a stock exchange or from a different market segment to
the Swiss stock exchange.
– Practical example: Transfer of the listing of
Lalique from BX Swiss to the Swiss stock exchange
(July 2018).
24
Increased Flexibility and Independence Without the marketing measures implemented by the
from Conditions on the Capital Market syndicate banks for the placement of shares as part
Opting not to make a placement of shares gives the of the IPO, such as (pre-deal) research coverage or
company greater flexibility when it comes to planning management roadshows, it is more difficult for the com-
its IPO, irrespective of the prevailing conditions on the pany to attract the attention of institutional investors
capital market. An IPO typically takes between four and with a long-term focus on the capital market. Without
six months to prepare and implement, from the start of the increase in trading liquidity associated with the
the project through to the first day of trading. During expansion of the investor base, the issuer also reduces
this time, conditions on the capital market may change the stock’s appeal for capital market investors. An insuf-
to the disadvantage of the issuer and expectations of ficient volume of trading makes it more difficult for
the company and/or its shareholders with respect to investors to reduce existing equity positions, too.
demand and prices in connection with the placement of
shares may not be met. This can delay the IPO. One way to measure the success of an IPO is to look at
the trend for the share price during the first few days
Since it is not necessary to place any shares with new of trading. In the case of a listing with no placement of
investors, the company can also have its shares listed on shares, SIX Exchange Regulation’s requirement for the
the stock exchange and admitted to trading in volatile recognized representative to provide an initial reference
capital market conditions that make IPOs difficult. It is price for the share prior to the first day of trading pre-
therefore not necessary to delay the listing until the sents a challenge. In the case of an IPO, this reference
next capital market-friendly IPO window, and the place- price corresponds to the placement price. When going
ment of shares that was not carried out upon listing can public without a placement of shares, there is no such
take place at a later date if necessary. price available, which makes it difficult to determine a
market-based reference price and therefore increases
Expansion and Diversification of the Investor Base the risk that the share price will fall and the listing will be
and Successful Commencement of Trading Made judged to be unsuccessful.
More Difficult in the Absence of a Liquidity Event
Even without a placement of shares in connection with a To summarize, a listing with no placement of shares is a
listing, companies expect to benefit from the appeal of viable alternative to a conventional IPO depending on
the trading venue and its market participants as a result the situation and objectives of a company and its share-
of listing their shares on the Swiss stock exchange. The holders.
hope is that the listing will raise the company’s profile,
expand (i.e. diversify) the company’s investor base and
generate a good volume of share trading. Friedrich Dietz (MD), Kalina Scott (MD),
Marius Zuberbühler (MD) and
Lukas Keuerleber (Associate), Formerly Corporate
Finance Team of Bank am Bellevue
25
Underwriting Agreement and Offering/Listing Prospectus
Underwriting Agreement and

Offering/Listing Prospectus
There are various documents that need to be pro- Offered and Placed Shares
duced as part of the IPO process. The two most impor- In the underwriting agreement, the parties first agree
tant documents for issuers are the underwriting on the number of shares to be placed. Some of these are
agreement and the offering and listing prospectus. new shares issued by the company (primary offering),
and the proceeds from placing them flows into the com-
Underwriting Agreement pany and is used to develop its business (key points are
the use of the issue proceeds and the equity story,
Significance of the Underwriting Agreement please refer to “Contents of the offering and listing pro-
and Contracting Parties spectus” section). Existing shareholders may also want
The issuer in an IPO receives support from various dif- to sell shares as part of the IPO in order to exit from
ferent parties including banks, who assist the issuer their investment (secondary offering).
throughout the process and handle the placement of the
shares. In the case of smaller IPOs this can be just one The offer may either comprise a fixed number of shares
bank (the “lead bank”), while for bigger IPOs a syndicate to be placed or a maximum number (“up to” offer). The
of banks led by the lead bank or banks is used. Unlike in issuer and/or any selling shareholders usually grant the
other jurisdictions, in Switzerland the lead bank usually banks a greenshoe or over-allotment option. This allows
also acts as the IPO consultant, which makes the selec- the banks to place more shares than there are available
tion of a lead bank and the negotiation of contracts with and to potentially cover their resulting short position by
the lead bank crucially important. exercising the over-allotment option.
The issuer concludes two agreements with the banks: an Offer Price and Share Allocation
engagement letter at the start of the process and the The offer price is usually determined by means of a book
underwriting agreement the day before the offer period building process. During the “pre-marketing” period, the
begins. The underwriting agreement is therefore only banks obtain information from potential investors
concluded at the end of the process once all parameters regarding the issuer and its valuation. This information
– apart from the offer price and potentially also the is used to set the price range for the book building that
volume – have been set. The offer price is normally not takes place in the offer period. During this time, offers
set until the end of the offer period, and is set out in a are collected from investors in order to be able to deter-
supplement to the underwriting agreement (the pricing mine an offer price at the end of the offer period. For the
supplement). If shareholders would like to sell shares in issuer it is not simply a question of achieving the highest
connection with the IPO then they are also party to the price possible, but rather laying the foundation for the
underwriting agreement. The underwriting agreement sustainable growth of the share price if possible. This is
governs the parties’ rights and obligations, and allocates also the goal of the allocation of shares. The allocation
risk between the parties with respect to their liability for criteria are based on objective criteria and should be
the information contained in the prospectus in particular defined based on the allocation directives for the new
(please refer to the “Liability for the prospectus” section). issue market published by the Swiss Bankers Association.
26
Other Provisions Contents of the Offering and Listing Prospectus

In addition to provisions regarding the offer and the The requirements applying to the listing prospectus
timeline and processing of the IPO, the underwriting originate from the Listing Rules and the various differ-
agreement also contains provisions regarding the com- ent schemes (such as Scheme A for shares) as well as the
pensation paid to banks, the guarantees offered by the pertinent directives issued by SIX Exchange Regulation
issuer (and potentially also the selling shareholders to a (for example the Complex Financial History Directive,
lesser extent) to the banks in case the offer fails, and DCFH). An offering and listing prospectus typically con-
liability (including indemnification), particularly for the tains the following sections:
information contained in the prospectus (please refer to – Summary (offer, business activities, financial
the “Liability for the prospectus” section). The banks performance indicators)
usually receive various commissions for their services, – Risk factors (description of risks applying to the
which are usually structured as a performance fee and issuer and its sector as well as the shares)
can also include a discretionary component for the – Offer (details of the offer, the shares being offered,
issuer. The banks’ obligations depend on the fulfillment the listing and processing)
of certain conditions by the issuer, but also on certain – The volume and use of the proceeds from the issue
market conditions that make it possible to place the – Dividends and dividend policy
shares in the first place. – Business activities (description of the business
including strategy and strengths)
Offering and Listing Prospectus – Information regarding the issuer (details of the
company and group, the company’s management
Obligation to Issue a Prospectus bodies, shareholders and articles of association)
Anyone who wants to publicly place shares in Switzer- – Information on the capital structure and the shares
land and have shares listed and admitted to trading on (capital and voting rights)
the Swiss stock exchange must prepare an offering pro- – Responsibility for the prospectus
spectus in accordance with the requirements of the – Financial arrangements, and potentially capitalization
Swiss Code of Obligations (OR) and a listing prospectus and MD&A (Management Discussion and Analysis)
in accordance with the Listing Rules of SIX Exchange
Regulation. The aim is to give potential investors an overview of the
issuer’s net assets, results of operations and financial
The requirements imposed on an offering prospectus by position so that they can make an informed decision
the OR are much less strict than the requirements for a about whether to subscribe or purchase shares.
listing prospectus. The OR also does not require a pro-
spectus to be registered or assessed by a regulator,
although this will change with the introduction of the
new Financial Services Act (FIDLEG, please also refer to
the “New Financial Services Act” section). The contents
of the listing prospectus, on the other hand, are similar
in the European Union even though the EU’s Prospectus
Directive does not apply in Switzerland.
27
Formal Requirements Liability for the Prospectus

The prospectus may be written in English, German, All parties involved in preparing the prospectus are
French or Italian, and must be submitted to SIX liable to the purchasers of shares for any losses they
Exchange Regulation at least 20 trading days prior to the incur as a result of information in the prospectus or in
listing or the start of the book building process as part similar notifications that is erroneous, misleading or
of the listing application. The prospectus is always a fails to meet statutory requirements. Liability for the
single, self-contained document, but some information prospectus in Switzerland is therefore very extensive.
may be integrated in the form of references. Depending Not only does it cover the prospectus, but also similar
on the structure of the offer, the price and/or volume of notifications. It applies to errors in the prospectus that
the offer are published in a supplement to the listing are both intended and the result of negligence.
prospectus once the offer period is over.
While banks may use the “due diligence defense” in the
New Financial Services Act case of errors in the prospectus as a result of negligence,
FIDLEG will enter into force in 2020 at the earliest, and this defense is ruled out for intentional errors in the pro-
will also overhaul the law applying to prospectuses, spectus. Due diligence defense means that the banks
among other things. A comprehensive prospectus obli- can show that they exercised the necessary care when
gation is to be introduced along the lines of the EU’s selecting consultants, investigating the facts and veri-
Prospectus Directive, completing a paradigm shift with fying the confirmation received (such as legal opinions
respect to Swiss prospectus law. This obligation to issue and comfort letters).
a prospectus will apply to anyone who intends to launch
a public offering for the acquisition of securities (includ- Liability for the prospectus is why consultants (are
ing any secondary offering) or apply for the admittance required to) conduct commercial, financial and legal due
of securities to trading on a trading venue. There will, diligence in connection with an IPO. This circles back to
however, still be certain exceptions from the prospectus the underwriting agreement mentioned at the begin-
obligation for public offerings, but not for admittance to ning, in which the banks among other things demand
trading. extensive warranties from issuers and indemnification in
the event of claims based on liability for the prospectus.
The obligation to register and obtain prior approval of
the prospectus from a government authority is new. The
formal assessment and approval of the prospectuses is Dr. Wolfgang Müller MBA, Partner
to be carried out by FINMA-approved entities, although Meyerlustenberger Lachenal AG
they will not assess their material accuracy. In the future
it will therefore no longer be possible for SIX Exchange
Regulation to check the prospectuses itself unless
SIX Exchange Regulation obtains approval from FINMA.
28
Selected Aspects Relating to Financial Reporting
Selected Aspects Relating

to Financial Reporting
In many cases, the transition from a privately held to These standards apply to the consolidated financial
a public corporation starts with the publication of statements. For most transactions the prospectus also
detailed financial information. This information is an includes the issuer’s separate statutory financial state-
important factor in any decision to invest. The main ments. The annual financial statements must be audited
requirements with respect to a company’s financial by auditors who are approved by the Swiss Federal Audit
reporting in connection with an IPO are described Supervisory Authority (RAB) or regulated by a foreign
below. audit supervisory authority that is recognized by the
Swiss Federal Council.
Historical Financial Statements
One prerequisite for an IPO candidate is the existence of If the listing is taking place more than nine months after
a financial track record, i.e. historical financial informa- the reference date for the most recent set of audited
tion for the three full fiscal years prior to listing 1. Young annual financial statements, SIX Exchange Regulation
companies or companies that are listed in accordance requires an additional set of interim financial statements
with certain standards (such as real estate companies) to be prepared for the first six months for the purposes
may apply for exemptions to be made to this rule. SIX of the prospectus3. There is no legal requirement for the
Exchange Regulation specifies which recognized financial interim financial statements to be audited or reviewed
reporting standards are required for which standards 2, by the company’s auditors.
for example:
Reporting on Complex Historical
1. International reporting standard: IFRS, US GAAP Financial Information
2. Swiss reporting standard: Swiss GAAP FER (FER), There are cases in which the issuer’s corporate structure
reporting standards in accordance with banking law has changed significantly or the issuer intends to con-
3. Standard for investment companies: IFRS, US GAAP duct a major transaction such as a takeover or spinning
4. Standard for real estate companies: IFRS, FER off certain business activities. If this kind of structural
change is material and has not been reflected in any
The financial reporting standards differ in terms of their audited financial statements, additional financial data is
scope and complexity, but all of them aim to provide a required in the prospectus in order to give investors a
true and fair view of actual circumstances. While IFRS clear impression of the issuer’s financial situation4. The
allow a comparison with foreign companies and are materiality of a structural change is assessed based on
more suitable for companies with international inves- a comparison of the company’s annual net profit, sales
tors, FER is less complex and time-consuming. The and total assets before and after the change.
choice of the suitable standard for the company is there-
fore the first step in the reporting process in connection
with an IPO.
29
Selected Aspects Relating to Financial Reporting
Depending on the nature of the structural change, the Practical Information

additional financial information may take the form of The transition to becoming a public company and the
pro forma financial information or certain historical associated transparency regarding the company’s finan-
financial statements such as carve-out or combined cial situation pose a challenge to many companies. The
financial statements. Carve-out financial statements are published “guidance” (e.g. targets for sales and EBIT)
used if only part of an organization such as a division must be based on an accurate budgeting process. Firstly,
is carved out and listed. Combined financial statements segment information must be published in order to pro-
are used in the absence of consolidated financial state- vide a more in-depth insight into the performance of the
ments by combining the separate financial statements individual divisions. It is therefore advisable to conduct
of individual companies under the same management a gap analysis (known as an IPO readiness check) in
so that they can be treated as a single reporting unit. important areas such as financial reporting, governance
Carve-out or combined financial statements must be and compliance, and legal and taxation, at an early stage.
prepared in accordance with recognized financial There will be more or less actions required depending
reporting standards and audited. on the company’s maturity. This makes it all more
important to start preparing the necessary financial
Pro forma financial information, on the other hand, is information in good time. It may be necessary, for exam-
used to illustrate the issuer’s hypothetical financial situa- ple, to switch to a different financial reporting standard.
tion as if the material structural change or transaction Success requires a thorough time line and the allocation
had taken place at the start of the last fiscal year covered of sufficient resources.
by the historical financial statements. To this end, the
historical financial statements (balance sheet, income
statement, earnings per share) for the last fiscal year are Daniel Haas, Partner, Accounting Advisory/Audit and
adjusted based on appropriate assumptions. Pro forma Martin Stevka, Senior Manager, International
adjustments are presented in the form of a tabular Accounting and Reporting KPMG AG
reconciliation. The principles on the basis of which the
financial statements were prepared and each individual
pro forma adjustment must also be described in detail.
Independent auditors must issue an assurance letter
regarding the preparation of pro forma financial infor-
mation.
1
Listing Rules, II. Listing, 1. Requirements for issuers
(4/4/2018) and the SIX Exchange Regulation Track Record Directive
(3/20/2018)
2
Financial Reporting Directive (3/20/2018), SIX Exchange Regulation
3
Scheme A, Equity Securities (5/1/2018), SIX Exchange Regulation
4
Complex Financial History
Directive (3/2/2016), SIX Exchange Regulation
30
The Equity Story – the Core of Investor Relations
The Equity Story –

the Core of Investor Relations
In the run-up to an IPO and for the entire duration of in a particular company. It must nevertheless tie in with
a company’s listing, the equity story is the most the information contained in the mandatory documen-
important basis for communication with the capital tation, such as the listing prospectus, or other means of
market. Rapid changes in framework conditions and communication. There is no place in the equity story for
increasingly frequent changes to business models unrealistic promises or “bigging up” the company’s
and strategies mean that the equity story has to be attributes, for liability reasons if nothing else. Only
regularly assessed and constantly adapted in those who fulfill their promises will build up credibility
response to new circumstances. The equity story and confidence.
reflects the company’s current situation and indi-
cates the potential for the future. Hard and Soft Factors
The first, essential equity story is usually developed in
The equity story gives analysts, investment advisors, preparation for an IPO, i.e. in a situation in which the
investors, journalists and other target groups key infor- advising lawyers, banks and auditors exercise a lot of
mation that allows them to gain the most comprehen- influence. Their task is to guide the issuer onto the stock
sive view possible of the company. Important factors for exchange as directly as possible, subject to strict com-
a decision to invest are a company’s growth drivers and pliance with the applicable regulations, directives and
its potential to increase its value within its sector. These customs. This gives rise to a preference for factual infor-
form the core of the equity story. Growth drivers can mation or “hard factors”. Content is prepared in such a
include technological innovations, advantages in terms way that it does not present any angles of attack for any
of quality, the cultivation of new markets, demographic lawsuits from investors or other target groups. The
trends or the use of new sales channels. Value can be story is dominated by descriptions of the strategy, struc-
increased by optimizing the company’s cost structure, tures, processes and systems, supplemented by figures
insourcing or outsourcing, partnerships, smart pricing, and factual information.
increased sales and higher margins.
On the other hand, the equity story also has to “sell” the
Identifying New Horizons company, which only works in combination with soft
Preparing an equity story is no easy task. The greatest factors. These include the corporate culture, the quality
challenge lies in not simply using the past as the basis for of management, the treatment of employees, proximity
determining a company’s potential. Instead, it is impor- to the customer, brand loyalty, quality of experience,
tant to develop a story that identifies new horizons and reputation and the quality of after-sales service. Although
prospects for the future. Less is more. While the listing none of these factors are easily quantified, their value is
prospectus must contain “sufficient information for undisputed and must be conveyed. The equity story
competent investors to reach an informed assessment must clearly set out why a particular (ideally unique)
of the assets and liabilities, financial position, profits business model makes sense and the chosen strategy is
and losses and prospects of the issuer, as well as of the particularly promising. The company must be presented
rights attached to the securities” (Art. 27 of the Listing in the context of its market and competition in such a
Rules [LR]), the equity story can be briefer and more way that an interested investor recognizes and wants to
succinct. It summarizes why it could be worth investing participate in its potential.
31
Unlike the listing prospectus, the equity story may also While a comprehensive equity story offers capital
use language that mainly focuses on readability. It is market participants clear insights into a company’s
about presenting complex issues and relationships in a strategy and its implementation, it also forces them to
way that is clear, understandable and accurate. invest a relatively long time in reading it. It can no longer
simply be assumed that investors will be willing to do
Story with an Expiration Date this. It is therefore necessary to start by summarizing
While it was only a few years ago that equity stories the equity story with a handful of core statements,
could be assumed to apply for a substantial amount of before going into them in detail individually.
time, this only applies to a limited extent now. New laws,
new technologies, changed consumption patterns and It is in any case good to examine an equity story from
innovative competitor business models can quickly time to time and to adjust it if necessary. Adjustments
render an established business model obsolete. Con- are a sign of strength. They indicate that the company’s
sider, for example, the impact of booking portals and management anticipate changes and are constantly
Airbnb on hotel chains, or online channels on retailers working to make the company more competitive and
and retail banking. Changed framework conditions appealing.
require the companies affected to adjust their strategies
and business models, and therefore also to revise their The Preparation Process
equity stories as a result. The preparation of an equity story is at least as impor-
tant as the equity story itself. It offers the company’s
The need to change the content of the equity story management an ideal opportunity to critically examine
grows in proportion to its scope and degree of detail. existing structures, to check the continued validity of
– Growth strategy
– Business model
– Success factors
– Opportunities and risks
– Analysts
– Corporate culture and image
– Investment advisors
– Management track record
– Market and market potential

Potential added
value
Equity – Institutional investors
– Private investors
– Brand and competition Growth drivers Story – Rating agencies
– Position on the market – Regulatory authorities
– Media
– Research and development
– Production and products
– Technology and innovation
– Marketing and sales
The equity story provides the information that allows the target groups to gain an impression of the company from an investor’s perspective.
32
past statements and to make proactive and well-justi-

fied corrections as necessary. The preparation process Content of the Equity Story
provides a good way to compare the company’s own The equity story provides answers to the following
p erspective with external perceptions. Because the questions 1:
equity story also influences other means of communica- – How has the company positioned itself in its
tion (annual report, company presentation, website, relevant market?
press releases, listing prospectus, etc.), it is worth work- – What is the current size of the relevant market and
ing with a high level of care and rigor. This requires com- how quickly is it growing?
munications know-how and good knowledge of the – What is the company’s strategy?
company’s strategy, business model and sector, as well – How is the company different from its competitors?
as capital market expertise, creativity and good written What can it do better?
expression. – What potential does the company have to develop
and increase its value, and how is it to be
exploited?
Walter Steiner, Steiner Kommunikationsberatung – What factors enable the company to exploit this
Member of GIRAS, the Swiss Society of Investor potential (quality of management, strength of the
Relations Agencies brand, technology, leadership in terms of costs,
sales network, corporate and service culture, etc.)?
– What weaknesses and potential for improvement
are there, and how are these being addressed?
– Where do the management see future
opportunities and risks?
– What do these factors mean for the shares and
shareholders?
– How should the current valuation and upside
potential for the share price be assessed?
– How does the company deal and communicate
with its various stakeholder groups?
1
List not exhaustive
33
It’s the Little Things
That Set Us Apart –
Lots of Them
Listing Requirements
An issuer and its securities must meet certain The pertinent provisions of company law (including
requirements in order for the securities to be listed. Art. 652a OR and also the FIDLEG Financial Services Act
In addition to meeting certain legal criteria, the in the future) must also be observed in connection with
issuer must have a minimum track record. It must the issuing of shares.
also meet requirements with respect to its equity
capital, valuation and free float. The purpose of this Requirements for the IPO
is to offer a certain degree of protection to investors
while also ensuring the liquidity of trading in the Overview
securities. With respect to the requirements for the IPO, the LR
distinguish between the requirements for listing (Art. 9
Regulatory Framework et seq. LR), the obligations with respect to listing (Art. 27
A listing is a standardized process for admitting securi- et seq. LR) and the listing process (Art. 42 et seq. LR).
ties to trading on a stock exchange, which involves
assessing the exchange’s requirements with respect to Prerequisites for Listing
the issuer and the securities (Art. 2 letter f of the Swiss With respect to the prerequisites for listing, a distinction
Financial Market Infrastructure Act [FinfraG]). In addi- has to be made between the requirements applying to
tion to the admission of securities by means of listing, the issuer and those applying to the securities them-
securities can also be admitted for trading without list- selves. The requirements imposed on issuers and secu-
ing (Art. 35 [1] FinfraG as well as the regulations for the rities vary depending on the standard chosen for the
admission of equity securities for trading in the admission of the securities. The following standards are
SIX Sponsored Foreign Shares Segment and the regula- available for equity securities (Art. 3 [2] LR):
tions for the admission of investment funds for trading – International reporting standard
in the SIX Sponsored Investment Fund Segment). – Swiss reporting standard
– Standard for investment companies
SIX Exchange Regulation sets down the rules for the – Standard for real estate companies
admission of securities for trading and their listing in the – Standard for depositary receipts
Listing Rules (LR), various supplementary regulations, – Standard for collective investment schemes
directives (Art. 4 LR), circulars and notices (Art. 5 LR).
Its authority to issue and monitor the aforementioned Requirements for Issuers
regulations stems from Art. 35 FinfraG. SIX Exchange The requirements imposed on issuers in accordance
Regulation imposes the prescribed sanctions (Art. 35 [3] with the international and Swiss reporting standards are
FinfraG) in the event of violations of said regulations. as follows:
– The establishment, articles of association or deed
of partnership must comply with the national law
applying to the issuer (Art. 10 LR).
– The issuer must have been incorporated for at least
three years (Art. 11 LR, see Track Record Directive
for exceptions).
35
– The issuer must have prepared annual financial Obligations with Respect to Listing
statements in accordance with a recognized financial The issuer must publish a listing prospectus in connec-
reporting standard for at least three years (Art. 12 LR, tion with the listing. The listing prospectus contains the
see also the Financial Reporting and Complex information required for competent investors to reach
Financial History directives). an informed assessment of the assets and liabilities,
– The auditors must meet the requirements of Art. 7 financial position, profits and losses and prospects of
and Art. 8 of the Swiss Federal Act on the Admission the issuer as well as of the rights attached to the securi-
and Oversight of Auditors (RAG) (Art. 13 LR). ties (Art. 27 LR).
– On the first day of trading, the issuer’s reported equity
must amount to at least CHF 2.5 million in accordance The information that the listing prospectus must contain
with the financial reporting standard applied in the is largely governed by the Listing Rules, the Financial
listing prospectus (for group parent companies the Reporting Directive, the Complex Financial History
consolidated equity is used) (Art. 15 LR). Directive, the relevant schemes (see Art. 28 LR) and, if
– Any other requirements specified by the Regulatory new shares are being issued publicly, Art. 652a OR. In
Board must be met (Art. 16 LR). certain circumstances, the listing prospectus may be
shortened (Art. 34 LR) or not prepared and published at
Requirements for Securities all (Art. 33 LR).
The requirements applying to the securities are as follows:
– The securities must have been issued in accordance The Regulatory Board may require issuers to make avail-
with the law applying to the issuer and in compliance able other information documents in addition to the
with the provisions applying to the securities listing prospectus, such as expert reports or contracts
(Art. 17 LR). (Art. 41 LR). Finally, the issuer must draw attention to the
– The listing must comprise all securities issued in listing in an “official notice”, and make reference to where
the same category (Art. 18 LR). the listing prospectus can be obtained (Art. 40a LR).
– At least 20% of outstanding securities in the same
category must be in free float and the capitalization
of the securities in free float must amount to
at least CHF 25 million (Art. 19 LR, see also the
Free Float Directive).
– The proper trading of the securities on the stock
exchange must be ensured and the disclosure of legal
ownership must be provided for (Art. 21 LR).
– The denomination of the securities must facilitate the
processing of a stock market transaction amounting
to a round lot (Art. 22 LR).
– Clearing and settlement through the settlement
s ystems approved by SIX must be ensured
(Art. 23 LR).
– The provision of services pertaining to dividends
in Switzerland must be ensured (Art. 24 LR).
36
Listing Procedure Periodic Reporting Obligations

Securities are listed on the Swiss stock exchange upon Periodic reporting consists of the publication of annual
application (Art. 42 LR), which must be submitted by a and potentially also semi-annual reports. The publica-
recognized representative (Art. 43 LR). The listing appli- tion of quarterly reports is optional (Art. 49 et seq. LR).
cation must be submitted to SIX Exchange Regulation at In addition to the audited annual financial statements,
least 20 trading days prior to the proposed date of list- the annual report contains detailed information on
ing (Art. 4 of the Equity Securities Procedures Directive). corporate governance that is specified in the Directive
Corporate Governance (DCG).
The listing application is to be submitted together with
documents including a draft version of the listing pro- The information that is to be published relates to mat-
spectus (or a corresponding document pursuant to ters including the group’s structure and shareholders
Art. 27 LR, see Art. 5 of the Equity Securities Procedures (significant shareholders), the capital structure, the
Directive regarding the documents to be submitted members of the board of directors and executive man-
together with the application). agement (personal data, particularly regarding any
vested interests), their compensation (see the informa-
If individual listing criteria are not met, the listing appli- tion obligations pursuant to the Swiss Ordinance on
cation must include a supported application for a corre- Excessive Compensation at Listed Stock Corporations
sponding exemption (Art. 44 (2) LR). If the requirements (VegüV) for issuers subject to VegüV), the co-determina-
for the sought-after listing are met, the Regulatory tion rights of shareholders, the duty to make a takeover
Board approves the listing application (potentially sub- offer (in the case of public takeovers), change-of-control
ject to conditions). If the requirements are not met, the clauses in contracts with members of the board of direc-
application is provisionally or permanently refused tors, executive management and other senior manag-
(Art. 47 LR). The applicant may request a preliminary ers, the auditors and the information policy. If the issuer
decision (Art. 48 LR). chooses not to disclose certain information specified in
the DCG, it must justify its decision in the corporate gov-
Requirements for Being Public ernance report (comply or explain) (Art. 7 DCG).
The Listing Rules distinguish between two forms of
reporting with respect to the requirements for being SIX Exchange Regulation checks each year whether the
public: annual report and the information on corporate govern-
– Periodic reporting (Art. 49 et seq. LR) ance meet the requirements of the Listing Rules.
– Other information-related obligations
(Art. 52 et seq. LR)
37
Other Information Obligations Although shareholders are fundamentally responsible

Other information obligations include the following: for disclosing equity investments pursuant to Art. 120 et
– Publication of a corporate calendar (Art. 52 LR) seq. FinfraG, the issuer has certain obligations in con-
– The obligation to disclose potentially price-sensitive nection with the publication of disclosure notices
facts (Art. 53 LR) (Art. 124 FinfraG).
– Disclosure of management transactions (Art. 56 LR)
– Obligation to disclose changes in the rights attached
to securities (Art. 55 LR, see also the Regular Alexander Nikitine, Theodor Härtsch and
Reporting Obligations Directive) Stefan Knobloch, Partners in the Capital Markets Team
Walder Wyss, Zurich
The duty to provide information on matters that are
potentially relevant to the share price (ad hoc publica-
tion) is very important at a practical level. There is a
fundamental obligation to immediately publish any facts
that are potentially relevant to the share price (Art. 53 LR
and Ad Hoc Publicity Directive). The issuer may post-
pone publication, however, in justified cases (Art. 54 LR),
namely if the fact relates to one of the issuer’s plans or
decisions and its announcement would impact the
issuer’s reasonable interests.
38
After-Market and the Importance of Research
After-Market and the

Importance of Research
“After-market” generally refers to the phase immedi- destroying the shares purchased in this way in order to
ately after an IPO. During this time, in addition to consolidate profits. The structured distribution of trea
a successful business performance, coverage by sury shares can be considered as an alternative to a cash
research analysts is desirable because it helps the dividend. Banks that qualify as lead banks for IPOs also
company achieve greater transparency vis-à-vis have the expertise required for these transactions,
investors. which can be complex.
After-Market The concept of total shareholder return often comes up

In addition to the over-allotment option already in connection with the after-market phase. Investors
described in the “Phases of the IPO Process” section and expect compensation for the risks associated with sub-
compliance with maintenance obligations, the main scribing shares in the form of a suitable increase in the
focus of newcomers to the stock exchange and their share price on the first day of trading. Trading then
investors shortly after the IPO is on trading liquidity. “normalizes” to a certain extent and investors focus on
Small and medium-sized entities often make use of pro- the long-term return comprising share price growth and
fessional market making. This ensures a narrow bid/ask the dividend yield. Investors have already been given
spread with sufficient volumes behind the bid and ask guidance regarding the company’s dividend policy in the
prices, which means that large-scale purchases and investment case as part of the marketing for the IPO.
sales can be carried out with a limited impact on the Total shareholder return is often compared with a
share price. A high level of liquidity is an important market index such as the Swiss Performance Index SPI®,
investment criterion for many investors, particularly for in order to judge whether a particular share is perform-
new listings. ing better or worse than the general market.
Participation in the capital market allows companies to The Importance of Research Reports
conduct a variety of subsequent transactions in order to During the IPO process, independent research reports
raise additional funds, distribute funds or reallocate issued by the equity analysts of the banks involved are
shares. One positive side effect of such transactions is an important basis on which investors make their deci-
the publicity they generate, as the transactions are sions. Even after the IPO, analysts’ assessments are
often picked up by the media. Additional funds can for crucial (particularly for smaller companies). Analysts
example be raised by means of a capital increase or by keep investors up to date by providing them with
issuing a convertible bond. Debt capital can be raised detailed analyses of publicly available information on
publicly by issuing a bond, for example to replace exist- companies such as annual reports, interviews or data
ing debt financing instruments or to increase gearing. regarding competitors. A company’s transparency
There are also attractive alternatives to the conventional improves because analysts obtain explanations for
dividend available when it comes to returning funds to any matters that are unclear, and in so doing make an
shareholders. A share buy-back program can be launched important contribution to enhancing the efficiency of
at a later date, for example, with the aim of subsequently the financial markets.
39
After-Market and the Importance of Research
Analysts are experts with substantial knowledge of Companies that are not covered by analysts (IPOs are
certain industries who monitor multiple companies in usually covered by at least one) tend to escape the focus
specific sectors such as the pharmaceutical or real of professional investors because the research required
estate sectors. They usually publish detailed studies on on the part of the buyer quickly becomes disproportion-
the companies they cover on a quarterly or semi-annual ately large.
basis. These are supplemented by daily commentaries
on information that is relevant to the capital markets, or
assessments of relevant developments at competitors. Dr. Andreas Neumann, Head Equity Capital Markets and
In these extensive studies, analysts present their assess- Tobias Bertschinger, Equity Capital Markets
ments of the most recent developments of companies’ Zürcher Kantonalbank
financial data and business performance, evaluate the
investigated company using common methods and offer
an investment recommendation. A critical eye is also cast
over the companies’ strategic goals, giving management
an external assessment of the feasibility of their objec-
tives. The investment recommendations or ratings are
typically divided into three categories with designations
such as “overweight/buy”, “market weight/hold” and
“underweight/sell”, and provide investors with brief and
concise orientation.
Analysts also organize roadshows in partnership with

the management of the companies they cover. These
bilateral talks or group meetings involve an intense
dialog that improves investors’ and analysts’ under-
standing of the business model and trends. Roadshows
are usually held shortly after financial figures are
released or in connection with a pending capital market
transaction and their main target audience is institu-
tional investors.
40
Investors’ Expectations of Listed Companies
Investors’ Expectations of
Listed Companies
A company’s “public life” begins after an IPO. In Prompt Profit Warnings/Guidance

order to meet investors’ expectations, a newly listed The company should be well informed about analyst
company must not only meet its regulatory obliga- forecasts and investors’ expectations regarding financial
tions but also ensure regular and transparent com- performance indicators. It makes sense for the company
munication with investors in line with best practice. to publish preliminary but not necessarily detailed infor-
A number of different instruments have become mation regarding substantial deviations that are already
established in practice for this purpose, including apparent prior to regular reporting.
proactive investor relations, non-deal management
roadshows, a detailed and user-friendly website, and Research Coverage
constructive collaboration with research analysts at Broad research coverage is beneficial for companies
various financial institutions. listed on a stock exchange. For companies that are
already covered by research, constructive collaboration
After an IPO, the question faced by newly listed compa- with analysts is one of the most important factors that
nies is “What now?” What does the company need to do the company can influence in order to achieve a fair
in order to fulfill investors’ expectations? SIX Exchange assessment by the market. Companies with no or insuf-
Regulation’s Listing Rules contain the provisions that a ficient research coverage can benefit from SIX Stage
company needs to comply with in order to maintain its Program.
listing. These rules focus on periodic reporting as well as
other information obligations that the company should Analyst Consensus
treat as minimum requirements. Investors’ expectations Companies that enjoy broad research coverage can pre-
regarding a company’s prompt, transparent and detailed pare an analysis and comparison of individual analysts’
information policy have steadily risen in recent years forecasts and share this with investors. This is a useful
and go beyond the regulations of the Swiss stock exchange task that gives the company’s management important
in many respects. The following specific aspects should information on analysts’ assessment of the market,
be mentioned: while also facilitating communication with investors.
Ad Hoc Publication: The Right Amount and Management Roadshows and Investor Days
Timing of Reporting Regular non-deal management roadshows are an effec-
The company must inform investors about important tive means for the company to maintain communication
events such as changes in management, acquisitions of with its existing investors and attract new ones. It is
other (sub-)entities, joint ventures or the conclusion of advisable to visit investors two to four times a year as
major contracts, as well as other events that are relevant part of a management roadshow (for example following
to the share price. Information must be provided on the publication of the quarterly or semi-annual results)
events with the potential to have a material impact on in order to inform them about how business is going
the company’s share price as soon as the key points are and the company’s strategy. These meetings also give
known to the company. Most companies now adhere to management the opportunity to better understand any
these rules rigorously. There are, however, also cases in critical points for investors and to respond to them in
which companies publish press releases too frequently, good time.
containing no facts that are relevant to the share price.
This can be counter-productive.
41
Investors’ Expectations of Listed Companies
Many companies also invite investors to their premises In summary, complying with best practice for communi-
once a year for a longer and more detailed company cations with investors and analysts is one of the most
presentation as part of an investor day. This offers important tasks for a listed company. The company
investors and analysts a more in-depth insight into the should endeavor to not only fulfill current requirements
company, its products and its strategy. It is also an but also to follow new developments and exploit them
opportunity to meet employees from different divisions insofar as it is advantageous to do so.
and at different levels of management and provides
valuable insights into the company’s culture.
Friedrich Dietz (MD), Kalina Scott (MD),
Website Marius Zuberbühler (MD) and
A user-friendly, informative and up-to-date website is Lukas Keuerleber (Associate), Formerly Corporate
a must for listed companies. In addition to information Finance Team of Bank am Bellevue
on the company’s operations, strategy, products and
management, this should also contain sufficient infor-
mation that is relevant to the listing such as financial
reports, company presentations, the share price, all
press releases, etc.
The Role of Investor Relations

Investors expect listed companies to designate an inves-
tor relations contact person as a direct point of contact
for their inquiries. That is why investor relations plays an
important role in a company’s success on the stock
market. In order to fulfill this role well, investor relations
employees must be very well informed about the com-
pany and understand the operating business in detail.
They must maintain regular contact with investors and
analysts and be aware of their opinions and concerns.
They must also be easily reachable.
“ It Is Important to Comply
with Best Practice for
”
Communications with
Investors and Analysts.
42
Capital Increases in Switzerland
Companies listed on the Swiss stock exchange can A capital increase from conditional capital is based on
rely on a firmly established process, various different the creation of share capital for equity-equivalent
structuring options and long-standing partnerships instruments, convertible bonds or employee option
between SIX, banks and law firms. The raising of cap- schemes. To this end, the shareholders amend the arti-
ital by stock corporations in Switzerland is governed cles of association in the same way as for authorized
by the provisions of the Swiss Code of Obligations capital, meaning that a two-thirds majority of votes
(OR). Companies listed on the Swiss stock exchange and an absolute majority of capital are required at the
also need to observe the provisions pertaining to general meeting. There is no time limit for carrying out
capital increases. the capital increase. New capital is not created, however,
until the conversion is carried out or the options are
Types of Capital Increase exercised.
The OR allows stock corporations to raise new share
capital by means of an ordinary, authorized or condi- Shareholders’ Subscription Rights
tional capital increase. In Switzerland, all forms of The OR provides for a right on the part of shareholders
capital-raising require the agreement of shareholders at to subscribe new shares. A company that raises capital
a certain point in time at a general meeting, the invita- must therefore offer existing shareholders the opportu-
tions for which must be sent out at least 20 calendar nity to subscribe new shares or share-linked instruments
days in advance. in proportion to their investments. Shareholders may
exclude subscription rights by a majority of at least
In the case of an ordinary capital increase, the share- two-thirds of the votes cast and an absolute majority of
holders specify the conditions for the capital increase by the shareholders represented at the general meeting.
an absolute majority of votes and authorize the board of The OR also requires a good reason for the subscription
directors to carry out the increase within three months. rights to be revoked and compliance with the principles
The specification of the price per share and the number pertaining to the equal treatment of shareholders. A
of new shares to be created may be delegated to the reason to exclude subscription rights must involve an
board of directors. This form does not involve any limit objective and clear interest on the part of the company.
on the volume of new capital to be created. Generally accepted reasons include M&A transactions,
employee participation schemes, recapitalization in
Unlike an ordinary capital increase, the volume of a cap- connection with restructuring or the addition of a new
ital increase from authorized or conditional capital is strategic investor.
limited to 50% of existing capital. In the case of a capital
increase from authorized capital, the shareholders While it is the shareholders who decide at the general
amend the company’s articles of association accordingly meeting to exclude the subscription rights of existing
and authorize the board of directors to create a maxi- shareholders for ordinary capital increases, in the case
mum number of new shares within two years. The of authorized capital this decision is delegated to the
amendment of the articles of association requires a board of directors. In this case the board of directors
two-thirds majority of votes and an absolute majority of must decide to exclude the subscription rights on the
capital at the general meeting. basis of the authorized capital in the articles of associa-
tion when carrying out the capital increase.
43
Most capital increases in Switzerland are conventional Timing Considerations

offers of subscription rights. Other structures are seen, The duration of a capital increase by a company listed on
however, including offers involving an accelerated book the Swiss stock exchange depends to a large extent on
building process subject to the exclusion of existing the structure chosen. While up to 10% of a company’s
shareholders’ subscription rights. In the case of sub- capital can be placed within the space of a given year
scription right offers in which the new shares are in a few days without issuing a prospectus, transactions
offered at a discount relative to their market price, the involving a prospectus require much longer. SIX Exchange
subscription rights can generally be traded on the Swiss Regulation has set a period of 20 trading days for
stock exchange for between five and ten days. This reviewing the prospectus, for example. Together with
gives existing shareholders who cannot or do not want the period for trading and exercising subscription rights,
to exercise their subscription rights the opportunity to and the process of settling the capital increase, a dura-
sell them on the market as compensation for the dilu- tion of at least a month should be expected.
tion. At the same time, both interested and existing
shareholders can build up their shares by acquiring In summary, the processes relating to the capital increases
subscription rights. In the past, however, issues have of listed companies in Switzerland have been very well
not always involved a discount relative to the market established for many years. Institutional investors are
price. The trading of rights is often not facilitated for also familiar with a variety of forms and structures,
capital increases at or near market price, i.e. in which allowing companies to efficiently boost their equity.
the rights have no intrinsic value.
Requirements for the Prospectus Friedrich Dietz (MD), Kalina Scott (MD),
If the new shares are offered publicly in Switzerland, Marius Zuberbühler (MD) and
Art. 652a OR requires an offering prospectus containing Lukas Keuerleber (Associate), Formerly Corporate
certain information on the issuer. SIX Exchange Regula- Finance Team of Bank am Bellevue
tion’s requirements for the prospectus, which companies
must also comply with, are much more extensive. The
Listing Rules are based on the EU’s Prospectus Directive,
but are less extensive and allow issuers greater flexibil-
ity. The Listing Rules generally cover the requirements
of Art. 652a OR. If the offer involves 10% or less of the
issuer’s shares (including conditional capital) within a
given year then the Listing Rules do not require a listing
prospectus.
44
Case Study: Glarner Kantonalbank
Case Study:
Glarner Kantonalbank
Glarner Kantonalbank’s successful IPO shows that Structure of the Transaction

even smaller companies with an attractive invest- A capital increase (which was subscribed in full by the
ment case can be well received by the stock market. Canton of Glarus) was carried out on the day before the
first day of trading. All new shares were then placed
Description of the Company publicly. As a result of the structure chosen, GLKB
Glarner Kantonalbank (GLKB), which was founded in received two-thirds of the net proceeds with the Canton
1883, is a universal bank focusing on the Canton of receiving the other third.
Glarus and the surrounding economic area. In addition
to mortgages, savings accounts, corporate accounts, Price Range
asset management and investment, since 2012 the Based on the specified price range, the market capital-
importance of the bank’s online distribution strategy ization came to between CHF 196 million and CHF
has grown significantly. GLKB is considered one of 247 million. A number of one-on-one meetings were
Switzerland’s most digitalized banks thanks to innova- held between investors and the management of GLKB
tive offerings such as the “Hypomat” for online mortgage during the book building. The offering was already
approvals and other “-omat” products. covered after just a few days thanks to the convincing
presentation of the investment case. The subscription
Background book was oversubscribed within the pricing range, with
In 2007 the Governing Council of Glarus was charged the desired mix of private and institutional investors.
with finding ways to achieve the best possible future
positioning of GLKB. The resulting ownership strategy Pricing and Allocation
envisioned the moderate opening of the bank for mar- Shares were allocated at a price of CHF 17.50. More than
ket-related reasons. The aim was to reduce the canton’s half of the allocated shares went to institutional inves-
liability risk by increasing capital backing, including by tors, more than a quarter to private clients of GLKB, and
means of external financing. In 2010 GLKB was trans- the rest to other clients in the retail and private banking
formed into a stock corporation covered by special segment. The over-allotment option amounting to
legislation, allowing the public to invest in its shares. around 14% of the base tranche was exercised in full two
weeks after trading started. The Canton of Glarus
Marketing and Roadshow remained the biggest shareholder following the IPO,
The IPO campaign was launched shortly after the inten- with a share of approximately 70%.
tion-to-float was announced in May 2014. The investor
education process, which involved presentations by
research analysts, generated highly constructive and
positive feedback regarding demand and possible prices.
The subsequent roadshow was aimed at institutional
investors. At the same time, GLKB held three popular
information events for private investors in the Canton of
Glarus. The reasons for the IPO (public involvement
through participation, and in so doing also cementing
relationships with clients and raising equity in order to
safeguard the ongoing development of business) met
with approval.
45
Case Study: Glarner Kantonalbank
Highlights of the Transaction GLKB’s share price has risen by more than 85% since the
The IPO of the innovative Glarner Kantonalbank is the IPO (as of April 2019, including the reinvestment of divi-
most recent privatization on the Swiss capital market. dends). Zürcher Kantonalbank was the sole bookrunner
The successful transaction achieved the desired broad for the IPO.
free float within the bank’s home canton. The current
investors number around 2,500 shareholders, including
many private investors from the Glarus region. Dr. Andreas Neumann, Head Equity Capital Markets and
The IPO at a Glance
Issuer and ticker symbol Glarner Kantonalbank/GLKBN
Listing SIX (Swiss reporting standard)
Volume offered CHF 64 million (including over-allotment option)
Number of shares offered Basic offer of 3,200,000 new shares

Over-allotment option of up to 300,000 new and
up to 150,000 existing shares
Free float 31.7% after exercising the over-allotment option
Total number of shares issued 11,500,000 shares
Distribution Switzerland: public placement

International: private placement with institutional investors
(under Regulation S of the US Securities Act)
Lock-up 12 months for the company (Glarner Kantonalbank)

12 months for the selling shareholder (Canton of Glarus)
Price CHF 17.50 per share (price range of CHF 17.00–21.50)
Market capitalization at IPO CHF 201 million
46
Case Study: Investis Holding SA
Case Study:
Investis Holding SA
The IPO of Investis Holding SA on the Swiss stock Investis moved into the property services business in
exchange is a good example of the continued strong 2011 after spotting the trend on the market toward
demand among investors for successful, owner-man- consolidation at an early stage. This business line was
aged Swiss companies. Investis was the first Euro- expanded by means of organic growth as well as a
pean company to successfully venture onto the stock number of acquisitions.
market following the Brexit referendum in the UK on
June 23, 2016, and the resulting turbulence on the The two business segments (property and property
capital market. The IPO placement price was set and services) allow Investis to take advantage of various
new shares with a volume of CHF 163 million were cross-selling opportunities. Thanks to its activities in the
placed on the capital market just four trading days field of property services, Investis has in-depth knowl-
after the referendum, on June 30, 2016. edge of the market as well as access to off-market
opportunities with respect to potential investments in
Description of the Company residential properties.
Investis Holding SA (the company, together with its sub-
sidiaries) is a leading residential property company in In 2018 Investis generated sales of CHF 197.5 million, EBIT
the Lake Geneva region and a national provider of real of CHF 74.6 million and net profit of CHF 54.4 million.
estate services in Switzerland. Investis employs around
1,100 people. Reasons for the IPO
In order to accelerate its next phase of growth by means
Ever since it was founded in 1994 by its current CEO and of attractive investments in its property business line
main shareholder Stéphane Bonvin, Investis has followed as well as selected add-on acquisitions in its property
an entrepreneurial approach with a long-term buy and services business, Investis decided to raise additional
hold strategy. The focus is on creating value with a com- capital by floating on the Swiss stock exchange. Thanks
bination of properties and property services. to the IPO and the associated increase in its profile and
financial flexibility, Investis can build on its strengths
Investis built up its real estate division over a period of and leading position with respect to residential proper-
more than 20 years. The real estate portfolio, which had ties and in the Swiss market for property services. This
a value of CHF 1,345 million at the end of 2018, is con- step also enables it to take better advantage of the
centrated in the region around Lake Geneva. The portfo- market opportunities arising from consolidation and
lio consists almost exclusively of residential properties. digitalization.
At the end of 2018 it comprised 157 properties with 2,911
residential units in the mid-range price segment.
47
Description of the Transaction Thanks to the positive performance of the share price in
The IPO consisted of a public offer to investors in the first few days of trading, the over-allotment option
Switzerland and a private placement in certain other was exercised in full one week after the price was set, on
countries outside Switzerland and the United States of July 7, 2016, and Stéphane Bonvin placed another
America (in accordance with the applicable securities 280,000 existing shares on the market.
laws and based on Regulation S of the US Securities Act
as well as the exceptions provided for in the Stock Following the exercise of the full over-allotment option
Market Prospectus Directive). the total volume offered amounted to CHF 163 million,
with a free float of 24.1% of all shares. This means that
The price range for the offered shares was set at CHF 49 after the IPO, 75.9% of the share capital and voting
to CHF 68 per share. At the end of the book building rights remained with the majority shareholder, who as a
phase the offer price was set at CHF 53 per share, which long-standing investor accepted a lock-up of 36 months
gave a total placement volume of CHF 148.4 million for for 67% of his shares and twelve months for the rest.
the 2,800,000 newly issued registered shares.
The IPO at a Glance
Issuer and ticker symbol Investis Holding SA/IREN
Listing SIX (standard for real estate companies)
Volume offered CHF 163 million (including over-allotment option)
Number of shares offered Base offer of 2,800,000 new shares

Over-allotment option for up to 280,000 existing shares
Free float 24.1% after exercising the over-allotment option
Total number of shares issued 12,800,000 shares
Distribution Switzerland: public placement

International: private placement with institutional investors
(under Regulation S of the US Securities Act)
Lock-up 12 months for the company (Investis Holding SA)

36 months for the selling shareholder and founder for
67% of share capital, 12 months for remaining shares
Price CHF 53 per share (price range of CHF 49.00–68.00)
Market capitalization at IPO CHF 678 million
48
Highlights of the Transaction the wake of the Brexit referendum. The capital market
The Investis IPO was the first IPO in Europe following transaction was conducted by Credit Suisse as the sole
the Brexit vote (less than a week after the referendum). bookrunner. Bank am Bellevue, Vontobel and Zürcher
During the book building phase the consortium of banks Kantonalbank acted as co-lead managers.
registered strong demand, particularly from institutional
investors in Switzerland, the UK, France, the Benelux
countries and Germany. On the first day of trading Friedrich Dietz (MD), Kalina Scott (MD),
Investis shares opened at CHF 53.75 and closed in the Marius Zuberbühler (MD) and
evening at CHF 57.30, 8.1% above the issue price. Lukas Keuerleber (Associate), Formerly Corporate
Finance Team of Bank am Bellevue
The example of Investis shows that a solid and high-
quality company can conduct a successful IPO even
during difficult times on the capital market, such as in
“ A Solid Company Can Conduct a
”
Successful IPO Even During
Difficult Times on the Capital Market.
49
Solution-Oriented
in Every Situation
IPO Checklist
IPO Checklist
Preparation Phase
When
1. Readiness Check and Selection of Competent Advisors Prior to X–4 Weeks1

Update company strategy and business plan
Make contact with SIX
Select IPO partners, including:
Lead manager and consortium of banks
Lawyers
Auditors/tax consultants
Communications experts
The SIX Exchange Regulation website (www.six-exchange-regulation.com) contains helpful lists of potential lead managers
and lawyers.
Agree kick-off date with IPO advisors
(Structuring of the IPO in terms of responsibilities, offer details, timing, etc. and start of the due diligence process)
Prepare investment case (in partnership with IPO advisors)
Check corporate governance structures (in accordance with the Code of Obligations, the SIX Exchange Regulation Corporate
Governance Information Directive and the Swiss Code of Best Practice for Corporate Governance)
Check and adapt accounting and controlling processes
2. Preparation for the IPO Up to X–4 Weeks1

Carry out due diligence process
Conduct initial valuation of shares
Prepare listing prospectus (recognized representative in close partnership with SIX Exchange Regulation)
Determine research and disclosure requirements
Prepare formal listing application for SIX Exchange Regulation:
Listing prospectus
Articles of association
Official notification
Excerpt from the commercial register2
Statement from the lead manager regarding free float 2
Statement from the issuer pursuant to Art. 45 of the Listing Rules, and declaration of consent 2
Proof in accordance with Audit Oversight Act
Prepare detailed communications concept for participants on the capital market (investors, analysts, media, etc.)
Finalize documents and presentation for meeting with analysts
Select and invite other syndicate banks in consultation with the lead manager
Hold analyst briefing (management presentation and Q&A for analysts at the banks involved)
Discuss share price valuation and book building process with lead manager and syndicate banks
Finalize investment case
Prepare list of possible questions and answers (Q&A)
Hold initial meetings with important investors (pilot fishing) as an indication for how to proceed
Start event planning the first day of trading in partnership with SIX
3. Submission of Listing Application X–4 Weeks1
51
IPO Checklist
Marketing and Implementation Phase

Date
4. Publication of IPO and Finalization of Roadshow X–4 to X+2 Weeks1

Officially announce planned IPO
Carry out investor education/analyst roadshow
Plan time, locations and structure of roadshow
Finalize documents and presentations for meetings with investors
Schedule ongoing feedback meetings with investors, advisors, analysts and sales employees of the syndicate banks
5. Book Building and IPO X to X+2 Weeks1

Receive admission decision relating to the IPO from the Regulatory Board of SIX Exchange Regulation X
Sign contract with lead manager and syndicate banks (underwriting agreement) X
Set and publish share price range X
Print listing prospectus (red herring) X
Hold roadshows with investors X to X+2 weeks
Continue ongoing feedback meetings with advisors, analysts and sales employees of syndicate banks X to X+2 weeks
Discuss pricing and the share allocation process on issue date with lead manager
Close order book and set definitive placement price X+2 weeks
Publish final listing prospectus, including prospectus supplement and documents X+2 weeks
Hold IPO event at the Swiss stock exchange (first day of trading) X+2 weeks
1
X = Day on which application to the stock exchange is accepted by the Regulatory Board of SIX Exchange Regulation
2
Documents do not need to be submitted until on or shortly before the first day of trading.
52
Selected IPO Partners
The following list shows a selection of partners and sentatives recognized by SIX Exchange Regulation on
recognized representatives (last revised: April 2019) our website:
who can assist and support issuers throughout the www.six-exchange-regulation.com/en/home/issuer/
entire IPO process. You can find a full list of all repre- admission/recognized-representatives.html
Contact Details for Partners with Articles in the IPO Guide for Switzerland
Company Scope of Recognition Address

economiesuisse – the Association of – Spitalgasse 4, 3011 Bern
Swiss Companies
GIRAS – the Swiss Society of Investor – Münstergasse 5, 8001 Zurich
Relations Agencies You can find an overview of all GIRAS
members at www.giras.ch
KPMG AG Bonds, equity securities Badenerstrasse 172, 8036 Zurich
Meyerlustenberger Lachenal AG Bonds, derivatives, equity securities, investment Schiffbaustrasse 2, 8031 Zurich
funds
Walder Wyss AG Bonds, derivatives, equity securities, investment Seefeldstrasse 123, 8034 Zurich
exchange-traded products (ETPs)
Zürcher Kantonalbank Full recognition Josefstrasse 222, 8005 Zurich
Selected Recognized Representatives
Banking

Bank Vontobel AG Full recognition Gotthardstrasse 43, 8022 Zurich
BNP Paribas (Suisse) SA Full recognition Selnaustrasse 16, 8001 Zurich
Credit Suisse (Schweiz) AG Full recognition Uetlibergstrasse 231, 8070 Zurich
Deutsche Bank Aktiengesellschaft Bonds, derivatives, equity securities Uraniastrasse 9, 8023 Zurich
Morgan Stanley & Co. International plc, Full recognition Beethovenstrasse 33, 8002 Zurich
London
Helvetische Bank AG Bonds, derivatives, equity securities Seefeldstrasse 215, 8008 Zurich
Société Générale Paris Full recognition Talacker 50, 8001 Zurich
Zurich Branch
UBS Switzerland AG Full recognition Paradeplatz 6, 8098 Zurich
Valiant Holding AG Equity securities Bundesplatz 4, 3001 Bern
Zürcher Kantonalbank Full recognition Josefstrasse 222, 8005 Zurich
53
Lawyers

Baker & McKenzie Bonds, derivatives, equity securities, investment funds 5, Rue Pedro-Meylan, 1208 Geneva
Bär & Karrer AG Bonds, derivatives, equity securities, investment funds Brandschenkestrasse 90, 8027 Zurich
BianchiSchwald GmbH Bonds, derivatives, equity securities St. Annagasse 9, 8021 Zurich
Bratschi AG Bonds, derivatives, equity securities, exchange-traded Bollwerk 15, 3001 Bern
products (ETPs), investment funds
CMS von Erlach Poncet AG Bonds, derivatives, equity securities Dreikönigstrasse 7, 8022 Zurich
Homburger AG Bonds, derivatives, equity securities, exchange-traded Hardstrasse 201, Prime Tower,
products (ETPs), investment funds 8005 Zurich
Kellerhals Carrard Bonds, equity securities Rämistrasse 5, 8024 Zurich
Lenz & Staehelin AG Bonds, derivatives, equity securities, exchange-traded Brandschenkestrasse 24, 8001 Zurich
Meyerlustenberger Lachenal AG Bonds, derivatives, equity securities, investment funds Schiffbaustrasse 2, 8031 Zurich
Niederer Kraft & Frey AG Bonds, derivatives, equity securities, exchange-traded Bahnhofstrasse 53, 8001 Zurich
Pestalozzi Rechtsanwälte AG Bonds, derivatives, equity securities Löwenstrasse 1, 8001 Zurich
Schellenberg Wittmer AG Bonds, derivatives, equity securities Löwenstrasse 19, 8021 Zurich
VISCHER AG Bonds, derivatives, equity securities, investment funds Schützengasse 1, 8021 Zurich
Walder Wyss AG Bonds, derivatives, equity securities, exchange-traded Seefeldstrasse 123, 8034 Zurich
Wenger & Vieli AG Bonds, derivatives, equity securities, investment funds Dufourstrasse 56, 8034 Zurich
Audit firms

Deloitte AG Equity securities General Guisan-Quai 38, 8022 Zurich
KPMG AG Bonds, equity securities Badenerstrasse 172, 8036 Zurich
PricewaterhouseCoopers AG Bonds, derivatives, equity securities, exchange-traded Birchstrasse 160, 8050 Zurich
products (ETP), investment funds
54
SIX
Securities & Exchanges
Pfingstweidstrasse 110
P.O. Box
CH-8021 Zurich
T +41 58 399 5454
www.six-group.com/exchange-services
Primary Markets
T +41 58 399 2245
primarymarkets@six-group.com
www.six-group.com/primarymarkets
None of the information contained in this document constitutes the basis for an offer or a recommendation to buy or sell a particular
financial instrument. SIX Group Ltd and its direct and indirect subsidiaries (referred to hereinafter as “SIX”) are not liable for the completeness,
accuracy, currentness or uninterrupted availability of the information it contains, or for damages incurred as a result of action taken on the
05.2019
basis of information contained in this or any other SIX publication. SIX expressly reserves the right to change prices or product ranges at
any time. © SIX Group Ltd, 2019 All rights reserved.

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How to Make Your IPO

More Efficient and Effective

Foreword The Importance of the Financial Sector 7

Raising Capital Efficiently for a Successful IPO 8

P.07–P.13 Reasons to Go Public 11

Prerequisites for a Successful IPO 12

Listing Without Placement of Shares 24

P.15–P.33 Underwriting Agreement and Offering/Listing Prospectus 26

Strong Partners Provide Selected Aspects Relating to Financial Reporting 29

P.35–P.49 After-Market and the Importance of Research 39

Investors’ Expectations of Listed ­Companies 41

Case Study: Investis Holding SA 47

“ The Swiss Stock Exchange Is One

“ The Financial Sector

Raising Capital Efficiently

The Swiss Stock Exchange – a Strong Network High Visibility

Around a third of the listings on the Swiss stock exchange

Your Benefits at a Glance:

Dr. Andreas Neumann, Head Equity Capital Markets and

Prerequisites for a Successful IPO

Realistic Proposed Valuations in Relation Capitalization and Tradability

Professional Corporate Governance Confirmation of Expectations

Prospectus The issuer must meet the requirements of the Swiss

SIX – a Reliable Partner The following documents must be submitted together

“ SIX Is a Reliable Partner

Phases of the IPO Process

Preparation Phase Marketing and Implementation Phase Follow-Up Phase

– Readiness check – Intention to float – Stabilization phase

Preparation of Equity Story/Business Plan

Preparation of Listing Prospectus Submission of Prospectus to SIX Prospectus Prospectus

Information for Analysts

IPO Research Reports

Publication of Intention to Float

Publication of IPO Research

Specification of Price Range

Book Building Price Setting

First Day of Trading

Follow-Up Phase Listed companies must also fulfill certain maintenance

Dr. Andreas Neumann, Head Equity Capital Markets and

Listing Without Placement of Shares

Instead of a conventional IPO, companies that are Spin-offs

Underwriting Agreement and

Other Provisions Contents of the Offering and Listing Prospectus

Formal Requirements Liability for the Prospectus

Selected Aspects Relating

Depending on the nature of the structural change, the Practical Information

The Equity Story –

– Market and market potential

past statements and to make proactive and well-justi-

Listing Procedure Periodic Reporting Obligations

Other Information Obligations Although shareholders are fundamentally responsible

After-Market and the

After-Market The concept of total shareholder return often comes up

Analysts also organize roadshows in partnership with

A company’s “public life” begins after an IPO. In Prompt Profit Warnings/Guidance

The Role of Investor Relations

Capital Increases in Switzerland

Most capital increases in Switzerland are conventional Timing Considerations

Glarner Kantonalbank’s successful IPO shows that Structure of the Transaction

Foreword The Importance of the Financial Sector 7

Raising Capital Efficiently for a Successful IPO 8

P.07–P.13 Reasons to Go Public 11

Prerequisites for a Successful IPO 12

Listing Without Placement of Shares 24

P.15–P.33 Underwriting Agreement and Offering/Listing Prospectus 26

Strong Partners Provide Selected Aspects Relating to Financial Reporting 29

P.35–P.49 After-Market and the Importance of Research 39

Investors’ Expectations of Listed Companies 41

Case Study: Investis Holding SA 47

Preparation of Listing Prospectus Submission of Prospectus to SIX Prospectus Prospectus

1. Readiness Check and Selection of Competent Advisors Prior to X–4 Weeks1