As an alternative to borrowing money, a company can raise capital by selling equity (a stake in its ownership).
The equity advisory team at an independent advisor such as Rothschild helps a company manage this process, providing impartial advice on all aspects of the transaction.
The team also advises on public offerings, which is where a company will look to sell its shares on a public market such as the London Stock Exchange.
As well as managing the overall process, in this instance the equity advisory team will help the client select large investment banks with sales and trading divisions who will drum up interest in the shares.
Down to business
We spoke to Shannon Nicholls, Assistant Director in the Global Financial Advisory team at Rothschild
What kind of work do you do?
“Our job in the Equity Advisory team is to provide independent financial advice to companies issuing equity via the market.
“Sometimes our client will be a first-time issuer. In this case we will help them undertake what’s called an initial public offering (IPO). This is where we provide the groundwork for the company to list on the stock market for the first time and help them achieve the best possible price for the shares being sold.
“We also work with listed companies to restructure their existing share offering. We can help them to raise new capital and, again, to achieve the best terms available.
“What we don’t do is run a sales or trading desk. This means that, unlike some investment banks, we don’t sell any products ourselves and the advice we provide is entirely impartial.”
What kind of clients do you act for?
“Our listed clients are typically mid-cap and beyond in terms of size. This means they may raise anywhere from $200 million to $25 billion.
“Sometimes there can be different parties involved in the ownership of the company. The firm may be partly owned by a private equity firm, for instance.
“In this case it’s a question of working to meet the interests of each of the different parties, including the management team at the firm itself.
“We will occasionally advise governments and other public institutions. For example, we have helped the UK government on its sale of RBS, and have also advised them on the sale of their stake in the Royal Mail group.”
Why is equity advisory a good starting place for a graduate career?
“Graduates joining an investment bank can often find themselves working at a considerable distance from the actual deal making process itself.
“One of the best things about being an analyst in Equity Advisory is that you are usually on the front line of the transaction or very close to it. You can expect a lot of interaction with clients and to be given a high level of responsibility from the get-go.
“Rothschild has a very strong reputation as an equity advisory firm. The opportunity to work on the most important deals and with the biggest clients was what brought me here.”
What type of person would it suit?
“The most important thing is that you’re someone who’s naturally interested in global equity markets as they are the main focus of the work we do.
“Strong analytical skills are essential, but this is also very much a client-based role, so strong interpersonal skills and the ability to build good personal relationships are essential.
“Our team is in constant communication with the management team and board members of our clients as well as a range of people from across the investment community. As a graduate, you are very much part of this.
“There is a huge amount at stake in the work we do and the demands can be fairly intense, so you need to be the kind of person who thrives in this kind of environment and who is happy to take on responsibility and run with it when it’s offered.”
What are the current big issues in equity advisory?
“Equity advisory tends to be quite a cyclical business, and the level of transactional activity will often mirror what’s going on in the world’s financial markets and the wider economy.
“When things are looking uncertain and the market is losing money, investors will tend to pull back and there will be fewer subscribers for IPOs and other issuances.
“A good example of this was China’s recent stock market crash which had reverberations in terms of shaking investor confidence around the world.
“However, it’s situations like these that make our advice even more important to our clients. They want to know they are getting the best guidance possible.
“Things have since settled down. Investment appetite seems to be getting stronger and people are going about their business. The outlook is increasingly positive.”