What is a Wholesale Offer

A wholesale offer refers to any offer only permitted to be made to investors who are eligible to participate under s708 of the Corporations Act 2001(Cth). Wholesale offers by listed companies are typically in the form of a placement (or issue) of new shares. If an unlisted company is raising capital without a full disclosure document, they may wish to do this via the issue of ordinary shares (such as a pre-IPO) or may chose alternative structures such as preference shares or convertible notes. 

Wholesale offers are available for members of the Capital Club 

Ordinary Shares

When a company undertakes an IPO or an Equity Crowdfunding offer, they issue new ‘ordinary’ shares.  All ordinary shares rank equally with pre-existing shares of the company and are issued upon the closing of the capital raising.

Convertible Note

A convertible note offer is where investors provide the issuing company with a loan in return for equity (shares) should the company reach a pre-determined conversion event. The conversion event typically comes in the form of another capital raising or an exit (IPO, trade sale etc.).

In most cases, the convertible note will convert to ordinary shares at the same price as the next capital raising less a pre-determined discount. 

Should the company not reach the conversion event, the convertible note will typically have a maturity date, where the loan either converts to ordinary shares, or the issuing company repays the loan. These details vary with each offer and are outlined in the terms of the convertible note.

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