Define Equity Capital Markets
Equity Capital Markets (ECM) is the team / group that is responsible for providing advice on equity, equity-linked and equity derived products, including shares, futures, swaps and options.
An ECM group will work closely with a client to organize transactions, structure the equity offering, and to improve valuation.
Some activities that an ECM group will advise on are:
- Distribution of new stock
- Equity private placements
What is an IPO?
An IPO is an initial public offering, in which the equity capital markets team helps a company issue shares to the public market to invest in on public exchanges.
What is a Private Placement?
A private placement is when a ECM team helps a company issue equity (not traded on an exchange) to a buyer or helps an existing investor sell shares to another private entity.
What is a Roadshow?
A roadshow is when bankers take the company looking to issue equity (or other financial instrument) around to potential large-scale investors such as hedge funds and pension funds. Together the bankers and the company management team pitch the new issue to potential investors.