Community Banks Are Succeeding With Reg A+ IPOs On The OTC Markets
It’s been two years since companies began using Regulation A+ to raise capital and list on the OTC Markets, Nasdaq, and NYSE.
One of the first Reg A+ IPOs to list on the OTC Markets, Elio Motors, recently announced that they will be doing a Security Token Offering to raise much needed capital. Almost all of 2017’s Nasdaq and NYSE Reg A+ IPOs ended the year trading below their IPO price. While Reg A+ IPOs have struggled there is a bright spot in the Reg A+ space – Community banks using Regulation A to raise capital and list on the OTCQX, QB, or Pink Current.
In a recent blog post, David N. Feldman of Duane Morris LLP noted that nine community banks with market capitalizations below $100 million have successfully completed Regulation A+ IPOs. According to Feldman, “the stocks of all but one of the nine are trading up from their IPO price. Three of the nine have since been acquired and gone private.”
According to a post on bankdirector.com, community banks uniquely benefit from Reg A+ offerings because; 1. Because they are already required to audit their financial statements, audits for a Reg A+ are not an added cost, and 2. Local banks can “test the waters” with and seek investment from their large, generally not accredited, customer base.
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