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NeroTulip


Total Posts: 1079
Joined: May 2004
 
Posted: 2020-10-15 13:12
Let's say I want to hedge the risk that some Unicorn will not be able to IPO above a certain price per share. The current perception is that the IPO is almost a sure thing, so I expect this to be a very asymmetric bet (20 to 1 odds or something like that).

- Shorting the stock is not an option, there is no borrow and I am not suicidal anyways
- The company is private, so I can't buy puts
- They have no debt, so no CDS either

Is there a way to place a bet with a bookie, e.g. "company X will not do an IPO above $Y per share in the next 5 years"? Doesn't have to be giant size, $1-10mm payout would do.

"Earth: some bacteria and basic life forms, no sign of intelligent life" (Message from a type III civilization probe sent to the solar system circa 2016)

cabron


Total Posts: 63
Joined: May 2006
 
Posted: 2020-10-15 13:24
I assume you mean "above $bY market cap in the next 5 years" rather than "above $Y per share in the next 5 years". Isn't this just the risk of underwriting?

Kitno


Total Posts: 496
Joined: Mar 2005
 
Posted: 2020-10-15 21:10
Provide a hedge to a/the private pre-IPO holders?

There's an active private market of sorts for the well-known pre-IPO firms (although usually controlled by the forthcoming IPO bankers: GS and the ilk).

On a laager on a hill. A long way from Avondale.

NeroTulip


Total Posts: 1079
Joined: May 2004
 
Posted: 2020-10-18 11:38
@cabron: I really mean price per share. Valuation means nothing if there is huge dilution in the pre-IPO round and the IPO...

@Kitno: Would I be able to buy puts from the IPO bankers? And if there is no IPO, would my puts be worth anything?

"Earth: some bacteria and basic life forms, no sign of intelligent life" (Message from a type III civilization probe sent to the solar system circa 2016)
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