While traditional companies have struggled with Reg A+ and fewer are opting to use the “mini-IPO” as a method to raise capital, SmallCap REITs & Community Banks continue to find success with Reg A+.
This was highlighted in a recent blog post by Joseph Oltmanns of OTC Markets Group. In the post, Oltmanns discussed how “REITs and Community Banks are paving the way for small cap companies to follow.”
This was true last year as well. In 2018 nine community banks with market capitalizations below $100 million successfully completed Regulation A+ IPOs and the stocks of all but one of the nine were trading up from their IPO price.
Almost all of the traditional companies that used Reg A+ to list on national exchanges have struggled and new listings have all but dried up. The NYSE recently decided to pause taking new Reg A+ issuers and Nasdaq is in the process of limiting Reg A+ to seasoned companies.
For now, the OTC Markets provides a home for Reg A+ IPOs. Another positive is that Reg A+ is no available to SEC reporting issuers like many of those listed on the OTCQB or OTCQX.
Time will tell what the future holds for Reg A+ but, for now, the “crowdfunded” IPO seems to be a fundraising tool of sophisticated financial businesses like REITs & Community Banks.
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