Introduction to Corporate Finance

12: Raising Long-Term Financing

There are a variety of advisers who get involved with various aspects of raising long-term finance in

Australia:

■ Corporate advisers and underwriters provide advice about the corporate and strategic ramifications of

raising funding.

■ Stockbrokers and investment banks assist with transactions, providing industry and company analysis,

valuations, advice on structuring, timing and pricing, and assisting with identifying and negotiating

with potential investors.

■ Underwriters and stockbrokers ensure that listed capital raisings will be successful, by agreeing to take

up any excess shares that are not sold.

■ Lawyers assist with all the legal aspects, including advising on ASX Listing rules, Corporations Act

requirements, preparing prospectuses and managing the due diligence process (often in conjunction

with the investment banks).

In addition, accounting firms provide auditing, reporting, valuation and taxation advice. Many

accounting firms also provide similar services to investment banks, especially for smaller capital

raisings.

The Australian listed equity market is one of the largest markets for raising listed equity around the

world. As Figure 12.2 shows, between 2009 and 2013, the Australian Securities Exchange (ASX) raised

the fourth-largest amount of capital, after the New York, Hong Kong and London stock exchanges. There

has been substantial consolidation in this sector in recent years, with many exchanges merging together;

for example, the London Stock Exchange (LSE) has merged with Borsa Italiana.

FIGURE 12.1 FINANCIAL SECTOR COMPOSITIONS FOR AUSTRALIA AND THE US*

0

20

40

60

80

100

Share of total financial assets of the sector

*As at 30 June 2010; excludes the central bank and central borrowing authorities

**For the US, these comprise commercial banks, savings institutions and credit unions

Sources: ABS; APRA; Board of Governors of the Federal Reserve System; RBA

Australia United States

% Other financial institutions Insurance Pension funds

Banks and credit unions and building societies**

Source: © Reserve Bank of Australia, 2001–2016. All rights reserved. Financial Stability Review, Reserve Bank of Australia,

September 2012, RBA Shadow Banking System, Graph B1, p. 36.