Law specialisms : Capital markets

Jonathan Parry is a partner in Ashurst's corporate department in London. He specialises in equity capital markets work, advising both corporate clients and investment banks.

What does the work involve?

Companies seek to raise finance in the capital markets for a number of reasons, including general working capital purposes, to reduce gearing levels or to meet a particular need such as the financing of an acquisition. Capital markets lawyers usually act on primary market offerings. In an equity context this will involve advising a company issuing shares to the public for the first time (an initial public offering), or an existing listed company issuing further shares, for example by way of a rights issue or a placing. In the debt context this will involve advising a company on the issue of bonds or notes to investors.

The primary task of the company's lawyers is to draft the prospectus or offering circular, although there are a significant number of ancillary documents which lawyers will either draft or negotiate. Capital markets lawyers will also undertake a due diligence investigation into the company issuing the securities. This seeks to ensure all material information is included in the prospectus/offering circular. A verification process then seeks to ensure that such information is accurate and not misleading.

When a company undertakes a capital markets transaction it will invariably appoint one or more investment banks to advise on the transaction, to market the issue of securities to investors and often to act as underwriter. These investment banks appoint their own lawyers to ensure that the banks' interests are appropriately protected from a legal perspective. The main workstream of the banks' lawyers is the drafting and negotiation of the agreement pursuant to which the banks will market and, if relevant, underwrite the securities issue. The banks' lawyers will also undertake their own due diligence investigation and will monitor the work of the company's lawyers to ensure that the process and documentation reach the appropriate standard.

Who are the clients?

The team of capital markets lawyers at Ashurst spend its working days (and occasionally nights) advising corporates and investment banks in relation to raising finance in the capital markets. The type of work divides broadly into two: equity capital markets work and debt capital markets work. The former involves listed and other publicly traded companies issuing shares which are bought by the public. The latter involves companies issuing debt in themselves in the form of bonds or notes. Unlike shares, the bonds will be repayable (either over time or at maturity in a 'bullet' repayment).

What do trainees do?

Capital markets work is truly international and Ashurst advises on domestic and international offerings of securities on stock exchanges in Europe, Asia, the Middle East and the US. The need to undertake comprehensive due diligence on the company issuing the securities means that capital markets lawyers can do a large amount of international travel and will build up significant knowledge in a wide range of sectors. The work is extremely varied and in most transactions there is a lot of scope for the involvement of lawyers at all levels of experience. Trainees will often be responsible for coordinating specific aspects of transactions such as the due diligence or verification processes and will also draft many of the ancillary documents.