OTCBB, OTC Listings and dual listing on the Frankfurt Stock Exchange (FSE Listings)
FSE Listings has written several blogs on the OTC Markets at the website www.otclistings.com and it has been asked time and time again, will we and can we dual list your OTCBB onto the Frankfurt Stock Exchange.
The Frankfurt Stock Exchange only allows listings of firms from actual exchanges and or dual listings from an actual exchange. The OTCBB is a quotation board made of market makers and doesn’t qualify as a stock exchange; it’s an electronic quotation system. Thus, the current rules do not allow for a dual listing of an OTCBB, as they did in the past. However, for the sake of raising capital and accessing the European Markets we do have a solution for OTCBB companies!
The Subsiduary Listing
We build a European Subsiduary structured to raise capital in Europe with prelisting capital commitments. The firm lists and raises capital as a wholly owned subsidiary and asset of the OTCBB company.
Once the firm has successfully raised the required capital and maintained their liquidity on the Frankfurt Stock Exchange, we suggest rewarding your OTCBB shareholders by dividending the subsidiary shares to the shareholders of the OTCBB company.
Benefits of this process:
Catching the short: Dividending of shares in the Frankfurt Exchange will catch the short positions of your otcbb company short of Frankfurt Shares not available to their US market making counter parts
Asset Valuation and low dilution: Sometimes the assets within an OTCBB company without the required capital don’t reflect their full value. Many people who own OTCBB’s often say, the assets are worth more than the market cap. With the listing of the asset, the shares of the European Holding Company often reflect the full value of the assets in the new structure with capital and momentum. To the OTCBB shareholders, the dilution of the asset versus their shareholding in the OTCBB also benefits their position in the long-run. The high valuation and low dilution allows for the OTCBB shareholders to hold a liquid valuable asset, which is more than most can say about the position of the firms as a sole OTCBB firm. The levels and layers of financial complexity are actually fairly simple and straight forward. We suggest having your Securities Lawyer and our listings specialist discuss the structure and what is best for your shareholders and firm.
Segregate Capital Raising in Two Markets: The fact is that the OTCBB company can raise capital within the US, and target the US shareholder base, diluting the parent company. However, the European listing can raise capital from Europe and globally, to whom the listing appeals to. By having the two markets, you can raise capital in both markets without negatively effecting the free float of one market with the other. The benefit is that Europeans understand European markets and tend to hold onto their shares and investments, in the US markets you have some who hold, but it is highly concentrated with day traders and speculators who move their investments based on sentiment. The US investors know their markets, the EU investors know their respective markets, don’t put them all in one market! Many people have made the mistake over the years of dual listing to access retail markets of investors who don’t understand their company nor the market of which they have bought into. Having shareholders who do not understand how to trade and dump shares in a panic or out of a lack of experience in trading can be harmful to the company’s corporate structure and image. Separating the markets is often a better idea than putting all of your assets and investors into one Big market. Once the investors understand and are educated withi the US market about the Frankfurt Listing, the company can decide to introduce them to the exchange with the dividend of shares, increasing the liquidity in their Frankfurt Market.
What is the next step?
Contact Brad.McCarthy@fselistings.com and ask if we can build a holding company to raise capital for your assets in Europe! Our representatives will contact you back immediately to qualify your firm, the assets, and options.