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In a registered direct offering, commonly known as an RD, a
company engages a placement agent to privately and confidentially
market its securities on a "best efforts" basis to a
targeted group of institutional investors. After the placement
agent has built the book, the company uses an effective
registration statement on Form S-3 to effect a "takedown"
from the shelf. While this type of offering has characteristics of
a private offering, the shares issued in an RD are registered and
freely tradeable. If properly structured on the front end, an RD
can be conducted on a short timetable, making it an appealing
choice for fundraising in volatile markets.
Pros:
- Short timeframe - RDs can be completed more quickly
than traditional firm commitment offerings.
