How to Subscribe to an IPO: A Guide for Investors

Before subscribing to an IPO, investors should gather information about the issuer and the proposed operation. It is advisable to seek advice from a qualified professional. Necessary information is available in the prospectus published by the issuer and approved by the AMMC. It is important to note that AMMC approval is not an encouragement to invest. Investors should review the documents provided by the company to form their own judgment about the investment opportunity and act accordingly. Additionally, it is recommended to inquire in advance about the procedures for subscribing to an IPO. The information note is the primary source of information and is available to the public at several locations: 1. at the Casablanca Stock Exchange in the "Espace Bourse"; 2. on the Casablanca Stock Exchange website; 3. at the headquarters of the company wishing to go public; 4. at banks and brokerage firms participating in the operation (placement syndicate). It is also important to understand that subscribing to an IPO is not free. It involves several commissions: * Brokerage Commission: 0.10%; * Brokerage Fee: agreed upon by members of the placement syndicate; * Settlement/Delivery Fee: approximately 0.20%, set by account holders; * Other Fees: 0.10% for order collection. The steps for subscription are as follows: 1. **Open a Securities Account with a Financial Intermediary** The first step is to open a securities account with a financial intermediary (bank or brokerage firm) that is a member of the placement syndicate. This account must be linked to a cash account. The subscriber must provide: * an identification document (CIN, residence permit, passport, or commercial register); * a signed account opening contract with the intermediary. Subscriptions must be backed by actual deposits (check or cash), collateral (consisting of securities held by the subscriber), or a bank guarantee. For individual subscribers, 100% of the subscription amount must generally be deposited in the account, which remains blocked until the allocation of shares. 2. **Submit the Subscription** The investor must then submit their subscription by filling out the individual subscription form with their financial intermediary (bank or brokerage firm that is a member of the placement syndicate). The intermediary must ensure that the subscription form is duly completed and signed by the subscriber and must provide a copy to them. The subscription order must be timestamped upon receipt. It is also possible to subscribe via an online platform if the financial intermediary offers this service. At the close of the subscription period, all requests are centralized by the Casablanca Stock Exchange, which allocates the shares and generates the transactions. 3. **Allocation of Shares** The allocation process determines how many shares will be assigned to each subscriber. The method of share allocation may differ among categories of subscribers. The main allocation methods that may be applied in an IPO include: - **Pro-rata Allocation**: Shares are allocated proportionally based on the ratio of shares offered to shares requested. - **Iterative Allocation**: One share is allocated to each subscriber in the same category until the number of shares designated for that category is exhausted, without exceeding the quantity requested by each subscriber. - **Qualitative Allocation**: Certain criteria are considered in determining the amount allocated to each subscription request according to pre-established rules. This method is only used for institutional subscribers and may prioritize certain institutional investors over others under specific conditions. 4. **Settlement and Delivery** This step marks the finalization of the transaction: shares are delivered, and funds are transferred. Settlement and delivery occur within three trading days following the initial listing, ensuring the transfer of ownership between the issuer and the new shareholders. **Zoom: Important Points to Note!** Several rules deserve particular attention: - An individual investor can only subscribe once to an IPO, except for employees of the initiating company (as outlined in the prospectus). In this case, the employee (who is also an individual) may subscribe twice: once in the "company employees" category and once in the "individual investors" category. - Subscriptions are made in cash using an individual subscription form available from members of the placement syndicate. - The subscription form must be signed by the subscriber (who should keep a copy). - During subscription, the investor must present a document verifying their identity; the list of required documents is provided in the operation's prospectus. - Subscriptions to an IPO follow a specific schedule published by the issuer in the prospectus. It is important to consult this schedule for the deadline for receiving subscriptions and the closing date, if applicable. - After the allocation of shares, the subscriber may receive fewer shares than requested if subscription requests exceed the available shares.