In the course of preparing a project for raising finance, a business needs professional services for the development of an offering memorandum, especially when it comes to capital-intensive and high-risk projects with significant financial needs.

This document visualizes main parameters of the project and the factors affecting its attractiveness and possible ways of investing.

A high-quality offering memorandum may become a serious trump card when looking for investors and agreeing on financing terms.

The potential investor gains a clearer understanding of the transaction, making more informed and safer investment decisions due to the complete and substantiated information contained in the memorandum.

Offering memorandum in practice: definition, goals and stages

An offering memorandum is a document, the main purpose of which is to present the current state of the issuer of securities, as well as the prospects for a specific project or directions for the company's development.

In addition, it should contain basic information about the company, including a description of its activities, market, financial results and their objective assessment, as well as prospects for future business development.

The term "offering memorandum" is often confused with the concept of a prospectus, which is incorrect.

These documents are related to different issues. An offering memorandum is an investment document intended for financing by an investor (a group of investors) and providing information about a business or project for decision making.

It should be noted that the draft offering memorandum is not a static document, which in practice means ample opportunities for editing and improving it. The issuer can at any time make changes and modify it so that it remains clear and transparent for the selected circle of investors.

Such modifications are also introduced to enable potential investors to more accurately analyze the value of specific investments.

The offering memorandum includes, among other things:

• Feasibility study.
• Description of the specifics of the business or planned project.
• Comprehensive market analysis and competition assessment.
• Estimated project parameters and financial analysis.
• Evaluation of project constraints and possible risks.
• Investment recommendations.

The key features of the offering memorandum as a tool for attracting funding require the provision of minimal information about the project initiator, an assessment of the project cost at various stages of implementation, as well as justification of the structure of the transaction for investors.

This document should contain a full description of the measures that ensure optimal interaction between owners, investors and project managers in the post-investment period.

The goals of writing an offering memorandum include the following:

• Obtaining short or long term funding.
• Ensuring strategic partnerships with investors.
• Preparation for pre-public offering and IPO.
• Private placement of the company's shares.
• Implementation of the issue of bonds.
• Sale of part of the company.

At the initial stage of creating an offering memorandum, the document is filled with information directly related to this enterprise.

This must be complete reference information, including the name and type of company, location, legal form and type of management, capital and list of shareholders.

The second stage of creating an offering memorandum is to determine the specifics of the activities of a particular enterprise to which it refers. This is understood as the totality of all aspects that relate to the subject of the company's activities. Here we are talking about the type of products sold by the company, the team that deals with specific tasks, as well as the concept of organizing the business.



The next step is the collection and processing of comprehensive information about the financial model of the business.

This information has the greatest impact on the broadly understood return on investment. It is generally recommended that this part of the memorandum be prepared diligently and with great care in order to manage the company's budget even more effectively and attract investments on better terms.

An example of an offering memorandum for business: project funding

The methodology and practical approach to writing an offering memorandum can vary significantly depending on the sector, company or specific project.

Below we have given an example in which we have listed the main points and sections to which special attention should be paid when developing this document.

Table: An example of an offering memorandum for a large project or business.

Section name	General considerations
Introduction	The introduction may contain a description of the financed business project, indicating the benefits of this investment for participants.
Risk factors	The risks and limitations of the project are of the greatest interest to investors. This section should include the following: Risk factors associated with the external environment. Risk factors related to the current business activity and financial health of the issuer. Risk factors directly related to the placement of securities.
Persons responsible for the implementation of the memorandum	This section contains a clear and informative statement by the issuing company, presented by the coordinator of the issue of securities.
Basic parameters and information regarding emissions	The section consists of a dozen items, including the following: A detailed description of the types, quantity and total value of securities, indicating specific preferences, restrictions on the transfer of rights, collateral and other aspects. The objectives of the issue, which are planned to be achieved at the expense of attracted capital, along with the planned project income. It should be mentioned what proportion of these funds will be directed to each of the goals. The total cost of issuing and offering securities included in the estimated cost of the issue, broken down by category. Legal grounds for the issue of securities, indicating the bodies or persons authorized to make a decision on the issue, as well as the dates and method of making the decision. An indication of the pre-emptive right of current shareholders to purchase shares and potential reasons for limiting this right in the future. The dates from which the placed shares must participate in dividends, indicating the currency in which it is planned to pay dividends to shareholders. A list of rights that securities give buyers, as well as the methods and persons involved in the exercise of these rights, including the level of responsibility of these persons to buyers and the issuer. Determination of the principles of the policy of the issuing company regarding the payment of dividends in the future. Principles of taxation of income related to the possession and circulation of securities, including the indication of taxpayer. The list of parties to the agreement on guaranteed placement and the essential clauses of these agreements, if such agreements are concluded by the issuing company. Rules for the placement of securities on the financial market. Other important considerations.
General information about the issuing company	This section of the offering memorandum should give potential investors a clear idea about the company, its level of reliability and financial stability: Name of the company, its type, country of incorporation, legal address with telephone or fax number, website and e-mail, identifier in accordance with the current statistical classification and tax number. The lifetime of the issuing company or a specific project, if it is limited by the statutory documents. List of legal acts on the basis of which a company or an investment project was established. The body that made the decision to make an entry in the register. If the issuer is a legal entity, the creation of which requires a permit (license), the offering memorandum should indicate the number of the permit with the name of the authority that issued it. Brief description of the history of the issuing company and its key activities, as well as important achievements and stages of development in the past. Clear indication of the types and amounts of the issuer's equity and the rules for their formation. Information about the unpaid part of the authorized capital. Information about the expected changes in the authorized capital as a result of the exercise of the relevant rights by the holders of convertible bonds (the pre-emptive right to purchase shares). The number of company shares and authorized capital with the possibility of its increase in accordance with the accepted procedure. List of stock markets where the issuer's securities or depositary receipts issued in respect of them can be traded. Information about the credit rating assigned to the issuing company or securities issued by it. Key information about the issuer's organizational and financial relationships that may have a significant impact on its activities, indicating the largest units of its capital group. Usually the name of the company, its type, place of registration, line of business, the share of the issuer in its authorized capital are indicated. General information about the issuer's products, goods or services, along with determining their cost and quantity, as well as the share of various groups of products, goods and services in the total sales proceeds for the capital group and the issuer, by business segments. Description of the main internal and external investments of the issuer, including capital investments. Cases brought against the issuer, including bankruptcy, enforcement or liquidation proceedings, if the outcome of the cases may be of importance to the issuer's business. Information about other cases in government agencies, court or arbitration, including pending proceedings, or even those that may occur according to the issuer's knowledge. Issuer's obligations, including those determining its financial health, which may significantly affect the ability of buyers of securities to exercise their rights. Information about any unusual events that affect results of operations for the periods covered by the consolidated financial statements in the offering memorandum. Significant changes in the finances and assets of the issuer and its capital group, as well as other relevant information that has emerged since the preparation of the document. Forecasts of the financial results of the issuing company. Key information about the main managers and controlling persons within the company. Information about the composition of shareholders, indicating the shareholders who own a certain percentage of votes at the general meeting and influence the company's policy.
Financial statements	The financial statements attached to the offering memorandum are compiled in accordance with current requirements and contain the key information necessary for potential investors to decide on potential participation in the project.
Annexes to the memorandum	The list of annexes may vary depending on the content of the memorandum and legal requirements. In particular, such a document may contain an extract from the state court register, the current charter of the issuing company and other.

Writing an offering memorandum: our services

As we can see, writing an offering memorandum for a large investment project is a complex and multi-stage task, the structure of which depends on the situation and should not be carried out according to a rigid template.

If you need support or advice on any investment issues, check out the list of KKAC services and entrust your project to professionals.



The offering memorandum prepared by the specialists of our company will contain all the necessary information about the specifics of the business, a comprehensive analysis of the market environment, and an assessment of existing risks.

All this will help to present your business and a specific investment project in the most favorable light.

KKAC Investment Group provides large businesses with a full range of services in the field of investment engineering and consulting, including feasibility studies, development of an investment strategy, business project evaluation, writing an offering memorandum, project financing and much more.

Our approach is professional, comprehensive and innovative, making funding affordable and reliable.

Together with its international partners, including reputable engineering companies and equipment manufacturers, KKAC can offer the construction and modernization of large facilities under the EPC contract.

If you are looking for a reliable investor, please contact our representatives.