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How many shares are subject to the lock-up period? The number of shares subject to a lock-up is usually quite large. Take SciPlay as an example. Before it went public, only 22 million shares were freely tradeable on the open market. But once the lock-up period expired on 30 October, a staggering 104.3 million more shares entered the market.
- What Is A Lock-Up period?
- How A Lock-Up Period Works For Hedge Funds
- Hedge Fund Lock-Up vs. Start-Up Lock-Up
- Benefits to IPO Lock-Up
- Exemptions of A IPO Lock-Up Period
- Downsides of Lock-Up Periods
- Example of A Lock-Up Period
- The Bottom Line
A lock-up period is a window of time when investors are not allowed to redeem or sell shares of a particular investment. This feature may be in place to protect other investors, preserve market integrity, or make sure certain securities are liquid.
The lock-up period for hedge funds corresponds with the underlying investments of each fund. For example, a long/short fund invested mostly in liquid stocks may have a one-month lock-up period. However, because event-driven or hedge funds often invest in more thinly traded securities like distressed loans or other debt, they tend to have prolonged ...
There are two main uses for lock-up periods, those for hedge fundsand those for start-ups/IPO’s. For hedge funds, the lock-up period is intended to give the hedge fund manager time to exit investments that may be illiquid or otherwise unbalance their portfolio of investments too rapidly. Hedge fund lock-ups are typically 30-90 days, giving the hedg...
There are a few reasons investors, companies, and regulatory bodies want lock-up periods. If you're wondering why lock-up periods exist, it's because a lock-up period theoretically: 1. Stabilizes Stock Prices Post-IPO: Lockup periods help stabilize stock prices following an IPO by preventing insiders from selling their shares immediately. This stab...
Exceptions and early releases from lockup periods can occur under specific circumstances. One common scenario is when a company faces an urgent financial need or strategic opportunity that necessitates an early release. For example, a company might need to raise additional capital quickly for expansion or acquisition purposes. In such cases, the co...
There are some obvious downsides to lockup periods that have been briefly touched on throughout this article. To summarize those downsides, the list below are unfavorable reasons companies or investors may not want lock-up periods: 1. Potential for Increased Volatility Post-Lockup: Lockup periods can lead to significant stock price volatilityonce t...
On July 26, 2024, WeRide Inc. filed a Form F-1with the Securities and Exchange Commission. The form was filed with the SEC as part of WeRide's IPO. As part of the IPO, WeRide extended share offerings to directors and executive officers. Those shares were offered with a lock-up agreement where nobody would be allowed to "offer, sell, contract to sel...
A lock-up period is a designated time (usually following an IPO) during which company insiders are prohibited from selling their shares. The period aims at stabilizing stock prices and preventing market volatility. Once the lock-up period expires, insiders can sell their shares, potentially leading to increased market activity and price fluctuation...
- Julia Kagan
Aug 31, 2023 · The length of an IPO lockup period can vary, but it typically lasts between 90 to 180 days. The exact duration is stipulated in the company's IPO prospectus. It's useful for investors to read this document carefully to understand the specifics of the lockup period for each IPO.
Feb 19, 2022 · After its May 18, 2012, initial public offering, the lock-up prevented the sale of 268 million shares during the company's first three months of public ownership.
May 16, 2016 · The Stingray Digital Group Inc. IPO included a 24 month lock-up with staggered releases (15% after 180 days; a further 50% after one year; the balance after 24 months). As with the issuer lock-up, the lock-up applicable to directors, officers and shareholders of Shopify ran from the date of the final prospectus, rather than the date of closing.
The law usually does not oblige businesses that want to go public to follow a lock-up period. The lock-up period is normally something that the company and/or the investment banks underwriting the IPO request. The purpose is to prevent excessive volatility and allow the market to find the stock’s true value. How Long is a Lock-up Period? The ...
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A lock-up period post-IPO restricts insiders from selling shares immediately. It curbs market volatility, allowing stock prices to stabilize and preventing oversaturation of shares. Lock-up periods range from 90 to 180 days, influenced by investment nature, with hedge funds having longer lock-ups. Companies using lock-ups are required by the US ...
