News

Market Information

Pre-IPO Shares Press Release - Case Study of Murray Goulburn

Tuesday, September 06, 2016

PrimaryMarkets is the place to List and Trade Pre-IPO Securities 

Pre-IPO Shares – Usual Practices by Board of Directors

Most companies seeking to list on the ASX and other bourses (regrettably) DO NOT usually develop an unfettered marketplace for their security holders to enable trading in their to-be escrowed/restricted securities.

Most Boards typically:

  • Are solely focused on raising new equity/cash to flow into the Company.
  • Do not wish any potential subscribers via their IPO to look at purchasing existing securities (e.g. Pre-IPO shares) from founding/existing security holders and employees in the shadow of the proposed IPO despite possible escrow restrictions and/or at a discount to the IPO price.
  • Try as much as possible to ensure that the founder(s), key executive(s)/employee(s) and early stage investors securities are “locked up” via voluntary or ASX required escrow restrictions for periods usually between 12 and 24 months from listing date. Their main purpose of doing so is to reduce the “aftermarket” effect of original security holders trying to get liquidity immediately post the IPO – i.e. trying to stop the rush for the door.
  • Request founder(s), key executives and management employee(s) and early stage investors to accept extensive escrow restrictions including prohibiting any and all dealings with such securities i.e. no trades, options, encumbering forward sales etc. of such securities.

In PrimaryMarkets’ view, such an attitude as outlined above fails a fundamental duty of a Board – namely to act at all times in the best interest of the stakeholders i.e. the holders of their securities. A Board may argue that their decision to IPO has taken into account the “cost” of escrow to stakeholders but fail to give them a liquidity point prior to the escrow restrictions being placed on the holder of the security at the date of listing.

We did note (with some humour) that one company who recently came across our bows referred to their security holders as “steak holders” and that, to us, really said a lot of what that Board thought of whom they represented.

PrimaryMarkets is the platform for dealing with unlisted securities including Pre-IPO securities that are very much sought after by our Institutional/Accredited/Wholesale/Professional Buy-Side Members.

Pro-Active Boards consideration of Pre-IPO Shares

CLICK HERE TO READ MORE


PrimaryMarkets delivers liquidity for Unlisted Securities and Investments. PrimaryMarkets is led by a highly-professional Board with strong marketplace experience and is an unlisted public company with a diverse shareholding of institutional, professional and wholesale/sophisticated/accredited investors. PrimaryMarkets has an ever growing base of Sellers, Buyers and Intermediaries and offers solutions for global investors in most jurisdictions worldwide.

Become a Member Here

 

 

Go Back

Become a Follower