Secondary Offerings — What are they, and how will they work for Ignite RATINGS?
Many are unfamiliar with secondary offerings and how they function. This post will go into the background on secondaries, how Ignite RATINGS will use them in the future, and how they will add value for all our IGNT token holders.
In the traditional finance world, secondary offerings take place when a company sells shares which are not in circulation after an Initial Public Offering (“IPO”). The company might have a number of reasons to do this. For example, shareholders might want to exit shares for liquidity, or the company might need to raise more cash. There are two types of secondary offerings, a non-diluting secondary, and a diluting secondary.
Non-Diluting Secondary Offerings- are shares held by the company that are released into the market. This offer has no effect on share prices. However; it does affect supply, which can cause a short term loss if carried out incorrectly.
Diluting Secondary Offerings - are the creation of NEW shares that previously never existed. This offering normally hurts the share price, but might provide the company with the capital required to expand, or exit out of debt. This action may eventually increase the value of the shares over time.
In both types of secondary offerings, a company would normally offer these shares to ALL investors. It would then be up to the investors to first purchase, then hold or sell them on an exchange.
The Ignite Secondary Offering
During the Ignite ICO we have minted 60,000,000 tokens, 50,000,000 of which will be locked and not counted towards our market cap until their release.
So why the extra 50,000,000 tokens, and how will they be sold?
Firstly, Ignite is an asset ratings platform. It’s fundamental that we are able to maintain a rating on EVERY issue or crypto asset. At the moment, over 1,500 projects are live and trading on exchanges. We see the crypto market only growing in size in the coming years. The increasing number security tokens and accompanying regulations are also likely to exponentially grow the crypto market.
Secondly, in order to maintain ratings content, our Ignite Hive community needs an incentive to rate and provide quality content on issues and assets. We do not expect our community to do this for free, whilst we will also refuse to take a fee for rating from companies (in direct opposition to the normal “centralized” industry practice).
We believe in putting our money where our mouth is by investing in the projects that the Ignite Hive rates highly. Thus, it will be necessary to have a large pool of deployable capital to make investments via our linked Ignite INDEX.
It may be the case that to grow Ignite’s capital base, a secondary offering to IGNT token holders will have to be made. Our white paper makes it clear that this can only occur 12 months AFTER the close of the Ignite RATINGS’ crowdsale on 28th February 2018.
How will it function?
All Ignite Secondary Offerings will be NON-dilutive. How? Because 100% of the capital raised via a secondary offering will be added to the deployable capital base of the Ignite INDEX. A decision may be made at the time of the secondary offering to split a secondary offering raise 80:20 — 20% being for operational costs if deemed necessary.
Additionally, to prevent any market flood or short term loss, Ignite RATINGS will only permit a MAXIMUM of 2,000,000 reserved tokens to be sold per quarter in a secondary offering.
It is our view that the above process allows the Ignite INDEX capital base to not only grow organically, but increase with the needs of the market.
We hope this post brings some clarity as to how Ignite will use its token supply over the coming years.
Ignite’s Token Sale is LIVE
Join us now @ https://igniteratings.com
