This occurs when a portion of the share capital in a company is placed with private investors before the IPO (Initial Public Offering) is scheduled to hit the market. Typically, these private investors in a pre-IPO placement are large private equity or hedge funds that are willing to buy a large stake in the company. The size of the investment means the price paid for shares in a pre-IPO placement is usually less than the prospective IPO price. The pre-IPO round will normally cover the listing costs of the IPO but may also provide working or expansion capital to strengthen the business prior to the listing.
These are investments that are at a stage where they will be ready to list on a market within a 3-12 month period normally. They are by definition later stage and should be far more developed but not necessarily producing revenue. Sometimes a company may use an IPO to raise funds that takes them to revenue production.
We put all our companies through a rigorous due diligence and verification process over a period of months before they will ever be available to investors and they have to be signed off by management.
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