Following up on positive statements by senior SEC staffers at the recent PLI Securities Law seminar and the SEC small business forum in November, the Commission also recently issued a white paper on how things are going under updated Regulation A, now known as Regulation A+. The white paper can be viewed at http://bit.ly/2ihfssS.
As we have known, the big headline was that, through October 31, just 16 months after the new Reg A+ rules took effect, 20 issuers completed financings raising a total of $189.7 million. That's an average of $9.485 million raised per deal. The SEC believes this number is understated due to the time frames tested. And the amount per deal is skewed somewhat by some very small financings that we know were completed. But still. As comedian Larry David might say, "Pretty pretty pretty pretty cool."
Other interesting tidbits: of the 84 Reg A offerings qualified by the SEC since June 2015, a majority, 49, were Tier II and the rest were the smaller Tier I offerings. Probably more important, 85% of the funds sought to be raised in those qualified offerings were in Tier II deals. Issuers are still working to get more of these closed Tier II deals trading on an exchange, and that is expected in the months ahead. Also, equity deals rule, comprising 85% of the Reg A+ offerings. As we also knew, most of the offerings and closed deals were best efforts or self-underwritten.
But my favorite quote from the SEC: "Early signs indicate that Regulation A+ may offer a potentially viable public offering on-ramp for smaller issuers—an alternative to a traditional registered IPO—and either an alternative or a complement to other securities offering methods that are exempt from Securities Act registration." Here comes 2017!!
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