On December 7, 2016, the SEC released a white paper on Regulation A+ offerings titled "Regulation A+: What Do We Know So Far?" The white paper analyzes Regulation A+ offerings conducted from the effective date of Regulation A+ (June 19, 2015) through October 31, 2016. The white paper notes that during this observation period the rate of Regulation A+ activity outpaced the rate of prior Regulation A activity. Despite a relatively small sample size and a short observation period, the white paper makes, among others, the following observations:
- Prospective issuers filed with the SEC offering statements for 147 Regulation A+ offerings, covering approximately $2.6 billion of securities. Of those offering statements filed with the SEC, approximately 81, covering approximately $1.5 billion of securities, have been qualified by the SEC.
- $190 million was reported as raised in qualified offerings.
- With respect to qualified offerings, there were 10 issuers seeking quotation on the OTC Markets, 17 issuers indicating that they would seek quotation on the OTC Markets in the future and one issuer seeking an NYSE listing (no issuers indicated they were seeking a Nasdaq listing).
- Issuers are availing themselves of both Tier 1 and Tier 2 offerings, but Tier 2 offerings were on the margin more common among qualified offerings, accounting for 60% of qualified offerings.
- The offering amount varied with issuer's size, with the average issuer seeking up to approximately $18 million.
- Issuers mainly offered equity securities, which accounted for over 85% of all Regulation A+ offerings.
- The majority of Regulation A+ offerings were conducted on a best-efforts, self-underwritten basis.
- Most of the issuers have previously engaged in private offerings, consistent with the use of Regulation A+ as an IPO on-ramp.
The white paper is available at: https://www.sec.gov/dera/staff-papers/white-papers/Knyazeva_RegulationA-.pdf.
Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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