Boustead Securities has successfully completed several Reg A+ IPOs recently. This has prompted a great deal of interest in Reg A+ offerings from prospective client companies and their legal, audit and financial advisors.
One of the key differences between our Reg A+ IPOs and a traditional IPO is the marketing process.
Limited Marketing Reach of Traditional IPO
In a traditional IPO, a company engages an underwriter, investment bank, broker dealer or a syndicate of broker dealers. Through the lead underwriter, the company markets the IPO to those firms’ brokers who contact their clients to buy the IPO stock.
In this process, the customers contacted for the IPO likely represent only a small portion of the investors who might be interested in the IPO.
Most of the potential investors interested in the company’s IPO are never contacted.
It’s been a common practice that the IPO syndicate firms may sell IPO shares to some customers even if the customers aren’t expected to be long term investors. After the IPO closes, these shares may well end up being quickly sold off into the market.
Inclusive Reg A+ IPO Marketing
In a Reg A+ IPO, because the Securities and Exchange Commission permits general solicitation, the underwriter, broker dealer or syndicate may use all forms of media (social media, email, influencers, targeted media, etc.) to contact potential investors who may be interested in the company or industry sector.
The goal is to find interested investors whether they have brokerage accounts with the syndicate firms or not.
We’ve found that including these interested investors in our Reg A+ IPOs results not just in incremental investors who are exposed to the IPO and subscribe to it, but in better natural investors who are less inclined to quickly sell after the IPO.
Please contact us to discuss your capital market goals and the Reg A+ IPO.