Global Allocation Policy
This is a summary of Little Square Capital’s Allocation Policy as it is typically applied to our Capital Markets business.
Little Square Capital (“LSC”) is committed to conducting our business with integrity and according to proper standards. In our advisory activity, LSC is subject to internal obligations to identify, prevent, manage and monitor conflicts of interest in order to prevent such conflicts from adversely affecting the interests of counterparts, in alignment and conjunction with Little Square Capital’s conflict of interest policy.
Purpose and Scope:
The policy reflects LSC’s position globally and is applicable to all proposed equity and debt transactions. The Policy also applies to any participation by LSC Capital Markets with partners internationally, to the extent permitted by local laws, regulations, and market standards.
We will endeavour to make available to the issuer or seller(s) relevant information to make its own, independent decision with respect to the allocation, investor selection, marketing, price, structure, timing, and other terms of the offering. Allocation proposals will be made subject to the objectives agreed with the issuer/seller(s) unless explicitly stated otherwise and the final allocations will be made in agreement with and provided to, the issuer client/seller(s).
Allocation on a fair and equitable basis
Issuer clients’ preferences and requirements will take priority, to the extent they are practical and not in conflict with the principles set out herein
Allocation will not be made as compensation or award for participation in any transaction
Allocation will not be made in consideration of any actual or promised, past or future revenue
Allocation decision criteria:
Allocation on a pro-rata basis is the primary allocation principle for all securities transactions. In the absence of a client decision, allocations will generally be based on an assessment of the merits of allocating to a particular investor and may also include the consideration of any one or more of the following:
The client’s marketing and investor targeting objectives;
The client’s allocation preference (i.e. for specific investors);
The applicable target market for the securities;
The client’s concentration preferences (i.e. to size and number of holdings);
The investors’ participation in the marketing and pre-marketing process
Quality and value of (or lack of) feedback on the issuer, or industry sector;
Timeliness of orders; earlier indicative orders are typically favoured;
The client’s aftermarket objectives;
Valuation is considered along with concentration preferences and pricing sensitivities of investors;
Any minimum or maximum allocation amounts;
Size of the request for allocation;
Balancing of the investment profile (e.g. hedge funds, private banks, sovereign wealth funds, etc.) and philosophy (active institutions, expected holding period, passive institutions, providers of liquidity) and of potential investors deduced from the book of demand;
Consideration of any “free float” or similar requirements of the listing, trading, or indexation regime;
Geographical locations of investors (including consideration of applicable selling restrictions);
Participation during the pre-marketing and marketing stages of a securities offering, with reference to;
the nature and manner of the investor’s participation in similar processes,
the investors’ level of engagement in the issuer, the issuer’s sector, or in past offerings by the issuer, including (market soundings [on a wall-crossed basis or otherwise], early look meetings, pre-deal investor education meetings, reverse enquiries)
Measures to prevent conflicts of interest;
Other considerations as appropriate.
Investors classified within the same category shall receive equal treatment, taking order and investor-specific factors into consideration. No individual investor or category of investors shall be unfairly treated or discriminated against.
Conflicts of interest:
The investors to whom we allocate securities may also be clients of Little Square Capital or have other relationships with the firm. To the extent that actual or potential conflicts arise between the interests of such investors and those of the issuer or seller(s), we will endeavour in good faith to manage such conflicts fairly. No subscriber shall be given preference on the basis of Little Square Capital's client profitability or relationship to employees of Little Square Capital.
If the offering is oversubscribed, neither Little Square Capital nor employees of Little Square Capital may receive any allocation if this reduces the allocation to clients of Little Square Capital or other managers (syndicate members) of the offering.
Little Square Capital shall disclose its main allocation principles to its clients before providing any placing services to that client – this could be at the time of the onboarding of the client, the signing of an engagement letter, the time of confirmation of appointment or another equivalent time. The following will also be documented;
Initial client discussions and the agreed proposed allocation per category of investors
Any further discussion, instructions, and/or preferences of the client and other members of the syndicate on the allocation process.
The content and timing of allocation requests (and indications of investor type) received from each investor.
The final allocations are communicated to each individual investor
Specific justification for any allocations to any investors which are not clearly justifiable by reference to, or inconsistent with the principles, or where the relevant firms believe a specific further explanation would be appropriate or desirable.
Any justification should explicitly provide detailed reasoning, and be available for the final allocation made to each investor. Any changes to the allocation objectives during the allocation process will also be recorded and filed.
Little Square Capital (and its affiliates) will engage in an ongoing dialogue with the issuer/seller(s), or our partners (where appropriate), and investors to determine the appropriate final price of the offering. This dialogue typically involves various discussions with, and communications to, Little Square Capital’s clients regarding the status of the book-building, including overall demand and price sensitivity of that demand.
Telephone conversations may be recorded and subject to monitoring or review with or without prior warning.
If you have any questions regarding aspects of the allocation process, please do not hesitate to contact us.