Shipping: This is how you get listed

Norway has a long tradition of being a shipping nation. Currently it's the world's fifth largest maritime nation. Measured by the number of stock listed companies, Oslo Stock Exchange (Oslo Børs) is the largest marketplace for shipping in Europe, and the second largest globally. The Norwegian capital market is extremely efficient in terms of capital raising and listing processes. 

This is how you do it!

Step one: Norwegian OTC

The Norwegian over the counter market (NOTC) has been described as a “fast-track listing” because it's a way to raise funds quickly, which is important if your company wants to take advantage of a buoyant capital market.

Contact an investment bank

A key step in this process is to contact a Norwegian investment bank, with expertise in the shipping sector. The investment bank will review the investment case, and assess whether it can assist your shipping company to raise equity proceeds.

If the investment bank(s) are of the opinion that the prospects of raising equity, “the equity story”, is a go to market case; the investment bank(s) will assist the company in the process to prepare offer documentation (key figures, financial information etc.). Professional investors will usually be contacted and normally no prospectus is prepared at this stage. If the company and investment bank(s) succeed in raising equity, the NOTC list is often where the company and shares are first traded. The registration of the shares on the NOTC list is a straightforward process with minimum documentation requirements. As mentioned, many companies perform the equity raise as a “fast track” listing in order to take advantage of a positive market sentiment, after all timing is crucial as the market can quickly turn against you.

Step two: Oslo listing 

Trading of the shares on the NOTC list is often a first step towards a full listing, either in Oslo or in the US capital market. The Norwegian capital market is a gateway to international markets and can be used as a stepping stone to listing in the US.

Efficient to raise capital in Norway

The Norwegian capital market is extremely efficient in terms of capital raising and listing process. Sectors where Oslo Børs are market leading include the oil service sector, shipping sector and seafood sector. Companies from all over the world are listed in Oslo and about ⅓ of the companies listed have a foreign domicile.

You need a due diligence process

A listing in the Norwegian capital market requires amongst other a listing prospectus and a due diligence process. The process is less costly and demanding compared to a listing in the US capital market. Involvement of legal and financial advisors is necessary in order to prepare the listing prospectus for approval by the Norwegian FSA and the listing application. If your company has raised equity prior to the OTC registration, a listing on Oslo Børs may take less time.

Listed companies can very efficiently tap into the bond or share capital market.

The downside of a private issue

- A majority of the equity offerings for listed companies in Oslo are performed through a private placement and not through a rights issue. The downside of a private issue is that existing shareholders not participating in the issue will be diluted. Hence, the private issue is usually followed up with a subsequent share issue to all shareholders that were not invited in the initial private placement.

Step three: US listing - or not

There is a general rule in the capital markets; the more the company pays, the larger investor universe you will reach. If you want to reach a larger investor community than a listing in Oslo can provide you with, the US capital market is number one for shipping companies.

You need more experts in US

Listing in the US requires more in terms of resources and expertise than a listing in Oslo. A listing in Oslo will provide you with most of the benefit of being a listed company, and at less cost compared to being a public company in the US.

A listing in the US will involve a team of advisors (financial, legal and investment banks) just like a listing in Oslo. In general, to register an initial public offering in the US your company will file a registration statement with the Security and Exchange Commission (“SEC”), typically using a so-called F-1 (for non-US issuers). An important part of the registration statement is the prospectus, which will be used to solicit investors upon listing. The SEC will review the registration statement (including the prospectus) and provide comments over several rounds. 

This is SOX requirements

Companies listing in the US may be subject to the Sarbanes–Oxley Act (“SOX”) from 2002 which aims to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the US securities laws. Adhering to the SOX requirements prior to and post listing is often demanding with increased costs. However, emerging Growth Companies (EGC) have a grace period from management attestation, and up to five year grace period for auditor attestation for SOX compliance. Certain small companies are not required to have auditor attestation.

A foreign company listing in the US (foreign private issuer - “FPI”) may have other exemptions/benefits from SEC reporting requirements, such as quarterly reports, option to report in accordance with IFRS and certain other exemptions.

If your company has already raised capital in the Norwegian capital market, the company can go for a so-called direct listing process (“DLP”) in the US. This means that new shares are issued, and existing shares in the company are sold to the investors in order to obtain sufficient float (liquidity in the shares). Such a process is easier than a full-blown IPO.