Private Placements and IPOs: Equitise’s Model

Private Placements and IPOs: Equitise’s Model

Equity crowdfunding is evolving. Having first established itself as the model through which new investor types could participate, it has since extended to fund various modes of investment.

Equitise has led this expansion with its syndicated investment platform, and its funding of the DongFang IPO last year, one of the world’s first crowdfunded IPOs. We are evolving further, excitingly, with the inclusion of a private placement deal room as a new aspect to our platform. Today, we assess the differences between IPOs and private placement deals, and why the inclusion of these two new investment types is a pioneering move.

It’s important to assess the differences between these two new deal rooms. Private placements are otherwise known as a ‘non-public offering’; that is, funding companies through a private offering to select investors. Typically, the types of investors who partake in private placements are banks, insurance companies and mutual or pension funds. The underwriting process is usually quite quick, with sophisticated investors mainly being the ones who fund such transactions. Equitise facilitates these types of transactions by allowing companies to use an Equitise private deal room with a close network of investors.

By contrast, IPOs, initial public offerings, refers to the stock of privately traded company being first offered to the public. Both young companies and large privately owned ones perform IPOs, as has been evinced by companies such as Google and Apple. By enlarging and diversifying their equity basis, having cheaper capital access, and attracting employees through liquid equity participation, IPOs fundamentally transform companies. From employment to structure, the new opportunities (convertible debt, cheaper bank loans, etc.) are varied and exciting. Follow-on offerings mean that the process is not a simple, one-off trick and can be done repeatedly to effect.

The association of IPOs with equity crowdfunding platforms is somewhat new, but Equitise’s feedback from its investment base suggested it was popular, owing to the inherent decreased risk (often more mature companies with further compliance obligations) and increased liquidity (due to trading on a registered stock exchange). As such, Equitise is open to collaborating with diverse companies to open up their shareholder, thus ensuring that their IPO is reaching the broadest and most involved array of investors.

Our new IPO launch, Crazy Domains, typifies the breed of innovative company and ambitious management that Equitise looks to target, and that our investors have a demonstrable appetite for. The company is Australia’s fastest growing hosting platform, with a distinct competitive advantage within its industry already, that it is looking to capitalise upon.

As always, if you have any questions on the above, feel free to get in touch with a member of Equitise.

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