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What is the OpenIPO auction? |
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WR Hambrecht + Co’s OpenIPO auction is a new way to take companies
public that increases access to IPOs. Based on an auction system designed
by Nobel Prize-winning economist William Vickrey, our OpenIPO auction
uses a mathematical model to treat all qualifying bids in an even-handed
and impartial way.* It is similar to the
model used to auction U.S. Treasury bills, notes and bonds.
Just like a typical auction, the highest bidders win in an OpenIPO auction.
But there are important differences. In our OpenIPO auction, the entire
auction is private, and winning bidders all pay the same price per share
– the public offering price. |
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How does the OpenIPO auction work?
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An OpenIPO auction is typically open for bids for one to two weeks prior
to the effective date of the offering. Once the bidding concludes, the
OpenIPO auction assembles the bids and, working from highest to lowest,
finds the first bid price that will sell all the offering’s shares.
This is the “clearing price” and will be the maximum price at
which the issuing company will offer its shares.
The issuing company and the underwriters then decide the price at which
the company will offer the shares, taking a number of economic and business
factors into account in addition to the clearing price. The company may
choose to sell shares at the clearing price, or it may offer the shares
at a lower offering price.
If the number of shares bid for at or above the public offering price exceeds the total number of shares in the offering,
WR Hambrecht + Co allocates shares on a pro-rata basis. Under these
circumstances, allocations will be rounded to multiples of 100 or 1,000
shares, depending on the size of the bid.
Click here to view how pro-rata allocation
works. For a complete description, refer to the plan of distribution in
the applicable prospectus.
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3.
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How do I participate in an OpenIPO Auction?
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To place a bid through our OpenIPO auction, you need to have a brokerage
account with WR Hambrecht + Co or an account at another firm participating in the auction. You can communicate with WR Hambrecht + Co
through the Internet or by phone or fax, but we strongly suggest you use
the Internet to avoid possible telecommunications congestion. Other participating
brokers may have different policies and methods of communicating with
their customers.
Once you have an account, submit your bid online for the number of shares you wish to purchase and price per share. The minimum bid is 100 shares and there is no maximum
bid.* You may bid any price you want, whether
it’s above, within or below the range stated in the preliminary prospectus.
Other than the minimum account opening deposit, you will not be required
to deposit any money into your account until after the registration statement
for the offering becomes effective. If your bid was successful, you must have sufficient funds in your account to settle the purchase of shares at settlement, which generally occurs within three days of the auction closing.
Click here for an overview of the bidding process.
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4.
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Can I change or cancel my bid?
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Yes. You can enter, change or cancel your bid any time up until the close of the auction. After the close of the auction, you will not be able to
change or modify your bid. You also may cancel your bid at any time until the Notice of Acceptance is sent; however, to cancel your bid after the auction closes, you will have to contact WR Hambrecht + Co (or the participating broker through which you submitted your bid) by telephone.
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5.
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Is my bid binding prior to the closing of the auction?
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No. A bid received by WR Hambrecht + Co involves no obligation or commitment
of any kind prior to the closing of the auction. Bids can be modified
or cancelled at any time prior to the closing of the auction.
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6.
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Will I have to reconfirm my bid?
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In most cases, you will not need to reconfirm your bid, either before or after the registration statement is declared effective. You will have the ability to withdraw your bid at any time until the closing of the auction. After the auction closes and the public offering price has been determined, bidders who submitted successful bids will receive a notice of acceptance and will be obligated to purchase the shares allocated to them. However, if any of the following events occur, we will require that bidders reconfirm the bids they have submitted in the offering:
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More than 15 business days have elapsed since the bidder submitted his bid in the offering.
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There is a material change in the prospectus that requires a recirculation of the prospectus by the underwriters.
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For an OpenIPO auction with a $4 price range (e.g. $8–$12),if the public offering price in the offering is more than 20% above the high end of the price range or below the low end of the price range.
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For an OpenIPO auction with a $2 price range (e.g. $9–$11), if the public offering price in the offering is more than 20% above the high end of the price range or more than 20% below the low end of the price range. |
If one of these events occurs, you will need to reconfirm your bid. In the case of a reconfirmation, we will notify all bidders via email. Please follow the instructions in the email that you receive in order to ensure that your bid remains in the auction.
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7.
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Can I submit multiple bids?
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Yes. In a Dutch auction, more than one bid can be successful. For example,
if you place five bids at different share prices and three bids are successful,
you will receive the combined number of shares from all three successful
bids at the public offering price. Your maximum potential obligation is
the sum total of all shares in the tiered bid multiplied by the final
public offering price.
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8.
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I opened an account with another online brokerage
to participate in an IPO. Can I use that account for WR Hambrecht
+Co’s OpenIPO auction?
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It depends. WR Hambrecht +Co maintains relationships with
a number of online brokerages but not every online brokerage. If you want
to ensure that you have the opportunity to participate in an OpenIPO deal,
you should open an account with WRH+Co and fill out a OpenIPO Bid form
to place a bid.
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What information will be available about
the company?
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Before making an investment decision, you should carefully read the preliminary prospectus, as it contains the only information the company can issue to the general public during the offering. For detailed information about the auction process for any particular OpenIPO type of offering, please read the preliminary prospectus, including the section of the preliminary prospectus entitled “Plan of Distribution.”
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10.
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Who can I contact with any questions?
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If you have any questions about the OpenIPO auction or your brokerage
account, please send an e-mail to info@wrhambrecht.com
or call us toll free at 1-800-673-6476.
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