As an eager first seat trainee, the opportunity to work with the Covington capital markets team on a high-profile equity capital markets and M&A transaction was one that I jumped at, albeit with a considerable degree of nerves.


I happened to be sat in the same office as the capital markets partner leading the transaction, allowing me to observe all the nuances of a capital markets deal.

The world’s capital markets serve as the trading floors of the business world. Businesses may seek funding via these markets in two main ways; either by issuing shares in their business (equity capital markets or ECM), or by receiving a loan from lenders (debt capital markets).

An example of an ECM transaction is an IPO (initial public offering). This is where a private company raises money by issuing shares for sale on a stock market to investors or members of the public for the first time. Capital markets lawyers commonly advise the company during this IPO process as it changes from a private company run by a small group of shareholders to a public company, subject to extensive regulation and to the will of a much larger – and more demanding – group of shareholders.

Following an IPO, a company may decide to raise more money by issuing further shares for sale. This is called a secondary issue of shares. There are different types of secondary issues such as placings, open offers and rights issues, the most common of which is a placing, where shares are issued to a specific group of individuals, usually contained within an institution.

Each time a company decides to issue shares for sale on a public market, it needs to ensure that it complies with the laws and regulations that govern the particular market upon which the company’s shares are traded and the laws and regulations of the country where the shares are being offered, as well as the laws and regulations of the country where the company is incorporated. This is where companies turn to equity capital markets lawyers for assistance.

My experience of the Covington capital markets practice involved working on the ECM part of an ECM and M&A deal, advising Vectura Group, a pharmaceutical company which treats airways diseases, on its €130m acquisition of Activaero GmbH and the placing of shares on the London Stock Exchange to raise approximately £52m from institutional investors.

Typical of a capital markets deal, this transaction involved multiple parties across different industries including investment bank Rothschild as the company’s financial advisor and Peel Hunt and JP Morgan Cazenove, as the joint bookrunners to the transaction. The bookrunners are the parties that agree to place the shares issued by the company with institutional investors.

The Covington team advised Vectura on a range of matters, such as the drafting of the company’s prospectus and presentation, negotiating the placing agreement, setting out the terms by which the bookrunners agree to procure investors for the placing as well as drafting numerous comfort letters and producing verification notes.

My role as a trainee involved working closely with the client to produce verification notes to back up the statements made in the presentation and the prospectus. The verification process involved reviewing the these two documents and making sure the wording was targeted, clear and most importantly, factually and materially accurate as these are the documents upon which the institutional investors primarily make their investment decision.

The verification exercise requires a close understanding of the intricate nature of the client’s business, which also meant that I accumulated more technical knowledge into the science that goes behind tackling respiratory lung diseases than I ever would have imagined.

As a junior lawyer, working on a large-scale capital markets transaction from outset to completion was a tremendous learning experience. Given that capital markets solicitors have to work with so many different parties across diverse industries, it provides an invaluable lesson on how to build successful working relationships with other professionals.

It also showed me the importance of open, honest – and often 24-hour – lines of communication between parties in bringing the transaction to a successful completion.

Ultimately, I am very grateful to have had the opportunity to work in capital markets so early in my legal training. It exposed me to exciting work that tends to be speedy, all-consuming and full of adrenaline, with never a dull moment.

Kamakshi Venkataramanan is a trainee at Covington & Burling