Mike Nespoli has been in the transfer agent business for 40 years and has worked on both the operations and client managements sides of the business. For the past seven years, he’s been with AST, a full-service, tech-enabled ownership data management, analytics and advisory firm. Here, he discusses how AST’s integrated model supports companies to, through and beyond the IPO.
Let’s begin with an overview of AST’s IPO business.
Mike Nespoli: We are the transfer agent of choice for companies looking to “go IPO.” This reflects over 50 years’ experience in the IPO market, with a dedicated team of more than 40 IPO specialists and relationship managers. We provide a range of services and solutions, including equity servicing solutions, custodial services, paying agent services and more.
We service all types of IPOs, including exempt offerings (144A offerings), special purpose acquisition companies (SPACs) and offerings including selling shareholders.
Since fiscal 2015, we have overseen over 320 IPOs, representing about 45 percent of all transactions in the U.S. market. In total, we directly managed nearly 11 billion shares offered, with a total value of over $160 billion. I think it’s fair to say that we’ve been doing something right for a very long time.
To what do you attribute this success?
Our successful model is made possible because of our dedicated team of IPO specialists. AST’s knowledgeable staff guarantees a seamless interface between the client and all additional parties involved. We work diligently with outside counsel and think it’s crucial for a client’s legal team to establish a mutual trust with us. They value our comprehensive expertise and know we’re available 24 hours a day, seven days a week to facilitate all the document preparation necessary for closing, and, when needed, provide recommendations on various issues pertaining to that specific offering, and after the IPO – especially in that first year after IPO.
In addition, AST has the distinct advantage of proprietary, fully-integrated infrastructure and application platforms. This not only keeps our recordkeeping in-house, but it ensures a secure operating environment. Our IPO specialists can immediately address client needs and meet changing regulatory requirements.
Another way we deliver value is by ensuring that clients will have the same level of service pre- and post-IPO. Our specialists work with our relationship managers from the beginning stages of the transitional process, and the latter are assigned to take over once the IPO closes.
What makes AST unique in this space?
AST has achieved this success and distinguished ourselves from other companies with industry-leading expertise and technology, a breadth of client services, and the extensive benefits we provide both during and after the IPO. In fact, 100 percent of clients stay with us as their transfer agent after we take them public.
We set ourselves apart by managing a streamlined operation and removing operational obstacles so we can focus on the complex needs of our clients. One major advantage in this regard is that we do everything from a central location. This allows our relationship support teams to get critical, time-sensitive client questions resolved simply by walking across the hall. In this way, we differ from some others in the space that conduct business from call centers and processing departments spread across multiple locations around the U.S. or the globe.
Perhaps the most important advantage in working with AST is that we are a one-stop shop for a company’s entire lifecycle, from its time in the private market through the IPO planning process, and then finally as a publicly traded company.
Are there any current market trends you can identify that have a direct impact on IPO activity?
The strength of the markets is typically a good indicator of IPO activity. For example, volatility works against issuers because uncertain conditions make pricing an offering trickier. The opposite is also true: when we experience strong market performance and low volatility, IPO deals flow.
We saw dynamic IPO activity for the better part of 2018, until sudden market volatility in early October rattled investors. We experienced more jitters due to the federal government shutdown, which handcuffed the economy for an extended period. While we haven’t bounced back from what we experienced in the bullish economy in 2018, spring 2019 is showing an uptick in IPO activity.
What we’re seeing now is an uptick in secondary offerings. This occurs when a business needs to raise capital, and that's typically going to occur when shares have been beaten down.
What are some of the specific services you provide pre- and post-IPO?
When we begin the IPO process as the transfer agent, we will have been appointed as the primary contact and liaison between our client and its shareholders. At this preliminary stage, all documents are set forth, including the client’s financial records. The next step is maintaining the schedule of shareholders, which ensures the integrity and continuity of all records.
Our dedicated IPO specialists work directly with outside counsel in preparing the documents needed for closing. AST maintains established relationships with every major underwriter, which guarantees a seamless interface between all parties involved in the IPO. Our processes allow us to transition shares held by existing shareholders – including pre-IPO splits, conversions and restrictions – into newly issued public stock.
Ahead of an IPO, companies can utilize AST’s Ownership Intelligence team to provide insights and analytics for the pre-IPO roadshow. AST’s analytics provides lists of likely and potential institutional investors for companies, by analyzing the ownership of peer companies. Since investors look to spread capital across industries, AST analyzes this data, helping companies gauge demand ahead of the IPO.
After our client transitions from working with our IPO specialist to operating as a public company, the AST relationship management team comes into play. They are responsible for a host of services, from maintaining shareholder records to coordinating their first annual meeting, which includes a comprehensive suite of financial printing and distribution services.
AST arms our clients with a platform that databases their ownership. In addition to providing registered ownership data, AST adds the list of institutional investors who received shares as part of the IPO. This data provides an ownership baseline that companies use to measure street ownership changes from the IPO to the first and subsequent section 13 quarterly filing periods.
What can AST offer clients that continue to work with you after they’ve gone public?
After a client goes through an IPO, they’re challenged with managing multiple sources of new ownership data. One of the biggest advantages for companies that work with us post-IPO is having access to our Issuer Central® platform, which is proof positive of the innovative spirit of AST. When it launched in 2018, it did so as an industry first, providing both shareholder and street (institutional and Insider) ownership data for C-suite teams in one consolidated interface. No other firm brings those pieces together in one place.
The Issuer Central platform aligns to AST’s uniquely comprehensive expertise across several core functionalities, including ownership intelligence, registry services, employee plan solutions and, in future updates, proxy and other share ownership-related services. It can help public companies uncover important ownership changes and insights by analyzing and presenting their unique ownership profile based on regulatory requirements and various other factors. Analyzing this data through Issuer Central gives clients a custom dashboard where they can view critical information to plan for corporate audits, annual general meetings and other corporate actions.
Are there any new developments at AST you can share?
We announced a very exciting launch earlier this year, AST Private Company Solutions™. AST already serves about 400 private companies, and through that work we saw a need in this space for a single firm to provide all of the technology, products and services they need.
AST Private Company Solutions will be releasing a technology solution to support the private company ecosystem. The company is led by Carine Schneider and headquartered in Silicon Valley, and offers capitalization and waterfall tracking, employee stock plan administration, and related transactional and liquidity support. It can serve all types of private companies, from VC-backed to PE-owned to LLC’S and family owned businesses.
When we say we support companies throughout their entire lifecycle, you can really see how this works in practice. From life as a private company, to going through an IPO, to life as a public company, AST provides our clients with everything they need to keep moving forward.
Published June 5, 2019.