The global capital market refers to a cross-border market for securities that are used to finance long-term capital needs of companies. The global capital market is used primarily by larg, sophisticated corporations that sell their stocks and bonds to institutional investors, like mutual funds, pension funds and other investment companies.
Financial transactions in the global capital markets take place in the world's biggest financial centers, like New York and London.
Determine the capital needs of your company. How much money can your company absorb without overextending itself? Do you need equity capital or debt capital? New equity capital can be raised by issuing new shares, while debt capital can be acquired though a bond issue or with a bank loan.
Think about whether you can satisfy your capital needs in the domestic market. Raising money in the country where your company is based is easier and normally costs less than going overseas in search of investments in your business. Can you cover your needs by a domestic issuance of shares or bonds? If it's not enough, you may need to tap into the global capital market. Look at what your competitors are doing in this respect and try not to fall behind (if they are getting funds from the global capital markets, you should probably do likewise).
Determine how you can access the global capital market. Contact investment banks and seek their help. One of the most popular ways to get access to the global capital market is though an initial public offering (IPO). An IPO is a sale of your firm's securities, usually common stocks, to the investing public on an organized stock exchange such as the New York Stock Exchange (NYSE) or the London Stock Exchange (LSE). Doing an IPO requires a lot of time, energy and money from the firms' executives and directors. At the same time, it transforms the way a firm is run, turning it into a public company that needs to make sure it meets its investors' expectations in terms of dividend payouts and corporate strategy.
Choose the best option for raising money from the global capital market and plan how you will go about raising the required capital. Whether you choose an IPO or a bonds issue, you will have to prepare for it, making changes to your corporate governance and financial reporting. You will need to audit your corporate financial accounts, hire a PR firm and prepare a prospectus--a business plan that also has information on the securities being issued. Contact your investment bank to get more help with this.
Carry out your capital raising plan. Work closely with your investment bank to do everything required to sell your shares or bonds to global investors. Be flexible. If you see a lack of demand for your securities, you may need to postpone the offering until market conditions recover.
Eliah Sekirin started writing newspaper articles in 2003. His work has appeared in "Junij Poliyehnik" and on Web sites such as Prepodi.com. His writing interests are business, finance, economics, politics, arts, history, culture and information technology. Eliah holds a Bachelor of Science in econometrics from Kiev Polytechnic Institute.