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Due to market volatility and regulatory constraints, recent secondary equity transactions carried out in the European market have mainly been accelerated private placements with institutional investors of new shares, convertible bonds or block trades, without prospectus.
Larger operations were mainly carried out through rights offerings, with a significant discount.
Regarding the minimum issue price for public offerings of new shares (without rights, the expression “public offerings” now also including private placements), a decree made on October 28, 2019 confirmed the French AMF’s position consisting in retaining the weighted average of the prices of the last three trading sessions preceding the announcement of the offer (with the possibility of a discount of up to 10 percent).
This particularly impacts institutional placements with book-buildings over several days (fully marketed offerings), as the case may be open to all audiences (including individuals); from a market perspective pricing is based on the last quoted price at the end of the bookbuilding; if this price is lower than the minimum legal in France (which is based on the reference prices preceding the announcement of the placement), the transaction cannot take place. Investments made in a very short time with institutional investors (accelerated book buildings or ABBs) are less exposed to this risk because there is no period of several days between the legal reference period and the actual reference price. It is possible to deviate from this rule if the AGM approved specifically an offering at a price disconnected from the legal minimum price (this option is limited in size; no more than 10 percent of the capital).
Shearman & Sterling has also contributed to the edition "Global Legal Insights - Introduction in Public 2020" (preface and chapters on France, the United States and the United Kingdom), available below: