UK: OFT market study on equity underwriting

The Office of Fair Trading is seeking views on the scope of a forthcoming market study into equity underwriting and associated services. In a press release published yesterday - see here - the OFT stated:

In 2009, companies raised an estimated £70 billion of equity capital in the UK, paying an estimated £2 billion in fees for equity underwriting and associated services. Initial discussions have confirmed that there is some dissatisfaction with these services among corporate users of the market.

The OFT proposes that the market study, which will commence this summer, should take a focused look at rights issues and other types of equity-raising by the 350 largest UK public companies, to consider whether users' concerns are justified. It intends to assess:

• How underwriting and related services are provided, including the level of competition for the work and how these different services such as advice, arranging the issue and the actual underwriting are sold.
• How underwriting services are purchased, including the information available to buyers and the incentives on them.
• How the regulatory environment affects the provision of these services.

Further information is available here.