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61/10 10 June 2010
The OFT today announced plans to undertake a market study into equity underwriting and associated services, and sought views on its scope.
In 2009, companies raised an estimated £70 billion of equity capital in the UK, paying an estimated £2 billion in fees for equity underwriting and associated services. Initial discussions have confirmed that there is some dissatisfaction with these services among corporate users of the market.
The OFT proposes that the market study, which will commence this summer, should take a focused look at rights issues and other types of equity-raising by the 350 largest UK public companies, to consider whether users' concerns are justified. It intends to assess:
The OFT is asking for views on the proposed scope of the study, such as whether to include aspects of capital-raising by companies whose securities are traded on the Alternative Investment Market (AIM) or initial public offerings (IPOs).
Clive Maxwell, OFT Senior Director of Services, said:
'Economic growth and productivity rely on companies being able to raise capital efficiently for investment. We plan to study the efficiency of the equity underwriting market and identify any areas for improvement. Our study will also help us to advise the Government in its wider thinking about wholesale financial markets.'
The OFT will discuss these issues with investment banks and other providers of equity underwriting services, large corporate businesses, the Government and trade bodies. Any interested parties can submit their views on the scope of the study in writing by 9th July 2010 to firstname.lastname@example.org or Equity Underwriting Market Study, Fourth Floor, Office of Fair Trading, Fleetbank House, 2-6 Salisbury Square, London EC4Y 8JX.
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