Capital-Markets Financing

Introduction

The teaching language is mainly Norwegian. However, there may be lectures and exams given in English.

All companies need funds to start and maintain its operations. In other words, they must be able to raise capital. In addition to obtaining capital from ongoing operations and bank loans, the capital markets allow companies to raise long-term funds by providing market places for securities. This course introduces the foundational legal rules and the core principles of corporate finance when businesses enter the capital markets in order to raise capital through Initial Public Offerings, private placements and bond issues.

The students will learn to understand the central and important capital market rules and duties that apply to investors and issuers, as well as the financial principles underlying these rules. More concretely, by completing the course, the students shall be able to identify, consider, and evaluate the core challenges and questions when entering the capital markets. It is also expected that the students shall be able to take a position on complex questions on the choice of financing, where financial factors such as cost, risk, time, company size etc. are evaluated against the legal rules to be applied in different situations. An important part of the course will also consist in the handling of inside information and other foundational rules on market behavior, such as disclosure requirements and market manipulation. As all capital markets law is international in its orientation, the students will be proficient in EU/EEA law, and be able to communicate with representatives of issuers and investors throughout Europe on an equal footing.

Course content

1. Overview of different financing options and forms: When, why and how?

• The main difference between equity and debt financing: Shareholder vs creditor position
• Long-term financing
• IPOs
• Private placements and rights placements
• Bank and bond debt
• Case: IPO or private placement

2. Equity financing

• Valuing stocks
• Raising equity capital
• Capital markets and risk premia
• Private placements vs rights issues
• Non-discrimination and dilution protection
• Prospectus rules
• Process/duration
• Environmental, social and governance (ESG) factors

3.  Debt financing. Choice of transactional form. Bank vs bond market financing

• Valuing bonds
• Types of bond loans; standard, convertible, covered bonds, warrants, etc.
• Green bonds
• Loan agreements, terms and conditions, covenants
• The institutions (bondholder meetings, the role of the trustee, etc.) 

4.  IPOs and SPOs

• Background: Main considerations and reasons
• Conditions: distribution, market cap, public interest etc.
• Due diligence
• Prospectus
• Process/duration
• IPO Puzzles

5. Leasing

• The basics of leasing
• Reasons for leasing
• Accounting, tax and legal consequences of leasing

6.  Options

• Option basics
• The binomial option-pricing model
• The Black-Scholes option-pricing model
• Corporate applications of option pricing
• Real options

7. Market Abuse

• Price formation and the importance of secondary markets
• The concept of inside information
• Insider trading
• Continuous and periodic disclosure requirements
• Market soundings
• Buy-backs and stabilization/green shoe options
• Market manipulation