Equity Offerings and IPO's

What is an equity offering?

If a public limited company needs more money, they can decide to sell more shares in the company.

New shares are issued and put up for sale at a pre-determined price. This is called an equity or share offering, or issue.

Public vs. private placement

APublic issueLets anyone buy the new shares (i.e. participate in the new subscription).

A Private placement Also called A preferential right issue, Is a share offering where only a selection of investors may buy the new shares, usually those who already have shares in the company from before.

An equity offering in a private limited company (AS) - as a secondary offering

An equity offering can also be done in a private limited company (AS) as a secondary offering, I.e. a resale of a large shareholding to several smaller investors. This kind of sale does not involve an increase of the share capital, and these become 'second-hand shares'. For private investors, there are few practical differences between share issues and secondary offerings. For them, they both mean the opportunity to buy shares in the company.

Why carry out an equity offering?

A share offering gives the company in question fresh capital for further growth and investments. Those who take part in the share offering by buying shares get, in return, ownership interests that give them the right to dividends from the company. They can also choose to resell the shares on the stock exchange private limited company (AS) as second-hand shares.

If someone wants to subscribe for or buy shares private limited company (AS) part of a share issue or a secondary offering, they must notify the facilitator of the transaction how many shares they wish to subscribe for/buy by the acceptance deadline the company has given.

At the end of the acceptance period, the shares will be distributed to those who have reported their interest to buy. If the demand is greater than the number of shares being issued for sale, the shares are distributed according to a key determined by the company.

In order to take part in the equity issues and secondary offerings online, you must be over 18 years old and have an account in a Norwegian bank.

Can I buy shares in an equity offering?

Yes, if there is a public equity offering, anyone can subscribe for shares. If there is a so-called private placement, you will normally be offered to subscribe if you already have shares in the company. Read more about this under the question 'What is a share offering?'.

How to find the equity offering in the online bank:

When the option to subscribe for new shares in an equity offering is opened up, as a non-professional investor, you can order shares via Investor Services in the online bank.

You'll find Investor Services in the main menu when logged in to the online bank*.

Read more about IPOs, equity offerings and subscription rights on our 'Share offerings and IPOs' page,Click here.

*To use our Investor Services you will need to accept the Investor Services agreement the first time you visit the page.

What is a subscription right?

For share offerings, existing shareholders often get a preferential right to buy new shares in the company. This is called a subscription right.

Only applies for a short period

What is important to remember is that subscription rights only last for a fixed time period. The length of time for a subscription period can vary, but the most common period is two weeks. If the subscription rights are not used in this period, they lose their value. It is therefore very important to keep track to ensure the values are not lost.

Preferential right issue

Everyone registered as a shareholder in a private limited company (AS) at a specific time will automatically be assigned subscription rights when there is a preferential rights issue. The share issue documentation will state how many existing shares give one subscription right.

To use a subscription right, you can log in to Investor Services in the online bank. Click on events and then on subscriptions.

Can I buy or sell subscription rights?

Within the subscription period, the subscription rights will (normally) be listed on the Oslo Stock Exchange. If you have been assigned subscription rights, you can buy or sell these by using the online equity trading solution in DNB.

How can I buy subscription rights?

Log in, go to online equity trading and search for the subscription right you are looking for. The subscription rights' ticker usually have a stock exchange ticker with an additional T at the end. For example, subscription rights in Norwegian Air Shuttle ASA, where the share has the ticker NAS, would have a subscription right ticker NAST.

Search, bring it up, and buy it like you would buy shares.

Sell subscription rights?

If you have been assigned subscription rights in a share issue, these will be visible in your portfolio summary in the online equity trading service.

Log in, go to online equity trading, click on the 'Portfolio and Orders' tab. Then find the subscription rights in the summary and click on the 'S' (for sell) on the small red button. Then do the same thing as you would when selling shares.

You will find price lists for buying or selling subscription rights here

How do I pay for shares bought in an equity offering?

When you order new shares either online, or by using a physical subscription form, you will need to specify the account that is to be charged. This must be a Norwegian bank account. The specified bank account will be charged on a fixed date specified in the prospectus and on the subscription form.

Can I withdraw from a subscription after it has been submitted?

No, the subscription is a binding agreement of purchase.

What does oversubscription mean?

If permission for 'oversubscription' is granted, you can subscribe for more shares than you have subscription rights to at the outset. However, you will only be guaranteed an allocation of the number of shares covered by the subscription rights you have at the end of the subscription period.

You may also buy more subscription rights on the Oslo Stock Exchange, provided that they can be bought on the stock exchange. These normally give the right to subscribe for one additional share per purchased subscription right, although sometimes more subscription rights are required in order to subscribe for one new share.

What is a share split?

A share split is when a limited company chooses to divide the value of a share. For example, let's say you own a share which is worth NOK 100. Then a split occurs which halves the value. After the split you still own the same value, NOK 100, but now you have two shares worth NOK 50 each.

Share splits are often done when a share has risen so much in value that it becomes more difficult to sell. Let's say that shares in a company have increased in value to NOK 10 000 each. The company may then decide to split the value by 100 to get each share down to NOK 100. More people can afford to invest in a share that costs NOK 100.

Example:Tesla split the value of its shares on 30 August 2020 by dividing the share price by five. The announcement of the share split came after Tesla had risen sharply in market value. The company said they hoped more people would consider investing in the company after the split. The price rose 6 per cent after the announcement. (ref.article in E24))

Read more about share splits and reverse share splits.

What is a reverse share split?

A reverse share split is a consolidation of share values.

Let's say a share has dropped so sharply in value that it's only worth a few pence. By doing a reverse share split, the share can be brought back up to a more "normal" share price, so it can be traded in pounds again and not pence.

Example: The airline Norwegian's share price was down to a value of 0.64 NOK each on Wednesday 16 December 2020. After a general meeting, they decided to reverse split the shares 100 to one. So after the reverse share split, the value of one Norwegian share was NOK 64.

Read more about reverse share splits and share splits here.