What is Sponsor Institution?

338 reads · Last updated: December 5, 2024

A sponsoring institution refers to an institution that serves as a sponsor in the process of a company's listing or securities issuance. Its main responsibilities include assisting the company in preparing for listing or securities issuance, providing consultation and advice, preparing and reviewing sponsoring documents, and being responsible for market promotion and sales during the issuance process. Sponsoring institutions need to have certain financial strength and professional capabilities, and comply with relevant laws, regulations, and rules of securities exchanges.

Definition

A sponsoring institution is an entity that acts as a sponsor during a company's listing or securities issuance process. Its main responsibilities include assisting companies in preparing for listing or issuing securities, providing consultation and advice, preparing and reviewing sponsorship documents, and handling market promotion and sales during the issuance process.

Origin

The sponsorship system originated from the needs of the securities market, dating back to the early 20th century in Western countries. As the securities market developed, the sponsorship system was gradually promoted and applied globally, becoming a crucial part of company listings and securities issuance.

Categories and Features

Sponsoring institutions are typically categorized into financial institutions such as securities companies and investment banks. Their features include: 1. Possessing professional financial knowledge and extensive market experience; 2. Having sufficient financial strength to support various activities during the company's listing process; 3. Adhering to strict legal regulations and stock exchange rules.

Case Studies

Case 1: When Alibaba Group went public in the U.S. in 2014, renowned international investment banks like Morgan Stanley and Goldman Sachs acted as its sponsoring institutions, assisting in the successful completion of its IPO. Case 2: JD.com went public on the NASDAQ in 2014, with Merrill Lynch and Credit Suisse as its sponsoring institutions, helping it smoothly enter the capital market.

Common Issues

Common issues investors face when choosing a sponsoring institution include: 1. How to evaluate the professional capability and reputation of the sponsoring institution? 2. Does the sponsoring institution have sufficient market resources and experience? 3. Are the fees and services of the sponsoring institution transparent?

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