We haven’t heard much from Loyal3 since the At Home IPO back in early August. Prior to that, the company made headlines when it partnered with T-Mobile to provide stocks rewards to mobile phone customers.
The down period ended Friday (11/11/16) when the company sent an email to customers announcing it will add Regulation A IPO offerings (aka Reg A + IPOs, aka mini-ipos) to its services lineup.
What Are Regulation A IPOs?
Regulation A IPOs are a new way to invest in small companies through equity crowdfunding as a result of the 2012 JOBS Act.
Early stage companies can attempt to raise up to $50 million by offering shares to the public. These IPOs are smaller and riskier than traditional IPOs because the companies are not well-established. This is startup investing.
For more details, check out this recent post.
Back and Forth
Loyal3 is the leader in offering traditional IPOs and follow-ons to ordinary investors, commission-free. Regulation A IPOs are a logical complement to the business since Loyal3 already has the IT infrastructure and experience to administer IPOs. The process should be similar.
However, Loyal3 is playing catch-up to Motif Investing, who has already listed two Regulation A IPOs on its platform; the ShiftPixy IPO, and the HomeUnion IPO. The Motif IPO platform is also commission-free and available to all customers.
Motif Investing officially announced Friday morning (9am) it has partnered with WR Hambrecht + Co and others (B. Riley & Co. for HomeUnion) to offer Reg A + IPOs to its customers. We assumed this when ShiftPixy landed on the Motif IPO landing page in early October.
Perhaps coincidentally, the Loyal3 email was sent three hours after the Motif press release. Maybe the timing was to assure us they are still significant players in the space and are not being left behind in the Regulation A IPO movement.
FAQs and Email List at Loyal3
The email from Loyal3 does an excellent job of summarizing Regulation A IPOs and links to more detailed explanations in the IPO and follow-on FAQs. Here’s a link.
Some notable highlights include:
- Loyal3 plans to limit their offerings to Tier 2 IPOs, which require more detailed filings and have an upper offering limit of $50 million. Tier 1 offerings, not available on Loyal3, have a max of $20 million and require less detailed filings.
- Loyal3 expects shares in offerings on their platform to trade on national exchanges. So you should be able to sell your shares on the Loyal3 platform, but the company notes that the amount of liquidity in these stocks may be uncertain.
- The process to invest in Loyal3 Regulation A IPOs should be similar to traditional IPOs aside from timing (the reservation period may be shorter or longer than a traditional IPO), and the pricing conditions may be fixed.
Please Note: A few weeks ago, Access IPOs noticed that Loyal3 is no longer collecting new email addresses for its IPO mailing list. When a new IPO hits the platform, it’s unclear whether the previous IPO email list (including some non-customers) will be informed of the opportunity, or if Loyal3 will only invite current customers. This page used to have an email opt-in for the IPO list. No more.
This could be due to the fact that most IPOs on Loyal3 are fully reserved in less than an hour and the company doesn’t need any more participants. Or that they want to reward actual long-term customers and not the opportunistic. Maybe it’s to help limit flippers.
How to Stay Informed
Since Regulation A IPOs are starting to hit our radar more often, I’ve added the Form 1-A filing requirement to the SEC RSS Feed Page. Find that in the top menu.
Bookmark the Upcoming Motif IPOs page for the latest happenings on the Motif Investing platform.
In the coming weeks, keep an eye out for our first Loyal3 Regulation A IPO. Shortly after Loyal3 announced its move into follow-on offerings, the first one became available. Since multiple Regulation A IPOs appear to be in the pipeline, I anticipate we’ll see something soon from Loyal3.