This document provides essential information for Investors concerning investments made through PRE-IPO. The information that it contains has been provided to you in order to help you understand what an investment through PRE-IPO consists of and what risks are associated with such investments. We advise you to read this document carefully in order to make an informed decision whether to invest or not.
Investing in unlisted companies can lead to significant capital gains. However, such investments should also be considered in the light of a few elementary rules:
Investing can be very profitable. However, it also involves a certain number of risks. If you choose to invest through PRE-IPO, you should understand and accept the following four important points.
Recommendation: do not rush into placement decisions and never sign documents without have first read them closely. It is notably recommended that subscribers contact the PRE-IPO teams if they wish to obtain further details, notably concerning the characteristics of the investment under consideration and the specific risks relating to this investment.
The prospective returns from an equity investment in unlisted companies are necessarily accompanied by a high risk of a total or partial loss of the sums invested.
This loss could be linked to the bankruptcy of the company in case of failure of its project or a lack of future financing. However, even if the company does not fail, a partial loss can result from lower than expected results in the future.
Investments in company bonds also feature a risk of loss of invested capital in case of a lack of liquidity at maturity or bankruptcy of the company.
A lack of liquidity corresponds in reality to difficulty in selling or trading the securities subscribed to.
Whether the company is listed or unlisted, there is no guarantee as to the liquidity of the investment:
By way of example, for an unlisted company:
Certain statutory and/or extra-statutory clauses in the operations presented can lead to potential restrictions on the negotiability of shares and limit the possibility of selling shares of the company – The shareholders of the company can be unable to find a purchaser of their stake
By way of example, for a listed company:
The historical shareholders can be required to maintain their holdings for a defined period following the date of the IPO – Volumes can be insufficient at the current share price to assure a counterparty for a sell order.
Consequently, Investors having subscribed to shares through PRE-IPO cannot count on a short-term exit. These constraints apply even to highly successful companies.
Recommendation: you should assure yourself that you can tie up the amounts invested over a long-term horizon without any set limit. Do not invest if you wish to have access to your money rapidly.
Certain companies could rarely or never pay dividends because their shareholders would prefer that money be reinvested in the company.
Recommendation: the companies proposing to raise funds through PRE-IPO will not always be in a position to pay dividends. These investments are not adapted to Investors seeking to obtain recurring revenues derived from their investments, as these revenues can fluctuate or even be non-existent.
Any investment realised through the platform could be subject to dilution. In other words, if the company raises additional funds at a later date through the issue of new shares subscribed to by new Investors, the percentage stake in the issuing company held by Investors who do not subscribe to this capital increase will fall.