OpenIPO: Institutional Investor FAQ

What is the OpenIPO auction?
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, all winning bidders all pay the same price per share – the public offering price.

 
How does the OpenIPO auction work?
An OpenIPO auction is typically open for bids for approximately 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 exceeds the number of shares in the offering, WR Hambrecht + Co allocates 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.

 
How do I participate in an OpenIPO Auction?
Contact David Marcus at (415) 551-8682 dmarcus@wrhambrecht.com or Matt Regan at (610) 725-1162 mregan@wrhambrecht.com or Whitney White at (212) 313-5940 wwhite@wrhambrecht.com. If you would prefer to bid online, please log in at www.openipo.com/institutions using the User ID and Password supplied by WRH+Co or another participating dealer. If you need a password call 1-800-OPENIPO.

 
Can I change or cancel my bid?
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 and after the notice of allocation is sent you will not be able to cancel your bid.

 
Is my bid binding prior to the closing of the auction?
No. A bid received by WR Hambrecht + Co involves no obligation or commitment of any kind prior to the closing of the auction and the notice of allocation being sent. Bids can be modified at any time prior to the closing of the auction.

 
Can I submit multiple bids?
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 (or a pro-rata allocation for each of the three successful bids). 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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WRH+Co reserves the right to reject bids that it deems manipulative or disruptive in order to facilitate the orderly completion of an offering, and it reserves the right, in exceptional circumstances, to alter the method of allocation as it deems necessary to ensure a fair and orderly distribution of the issuing company’s shares. For example, large orders may be reduced to ensure a public distribution, and bids may be rejected or reduced based on eligibility or creditworthiness criteria. In addition, WRH+Co may reject or reduce a bid by a prospective investor who has engaged in practices that could have a manipulative, disruptive or otherwise adverse effect on an offering.