TORONTO: Canadian online brokerages Wealthsimple and Questrade Inc are joining a wave of companies promising to offer access to firms planning initial public offerings (IPOs).
Wealthsimple said last Thursday it will allow ordinary investors to participate in US and Canadian IPOs as soon as they’re launched.
Rival Questrade says it will follow with even earlier access to private companies.
At Wealthsimple, clients will be able to request shares for certain upcoming IPOs, with no minimum order. The Toronto-based financial technology (fintech) company will work with investment banks, which will allocate shares to the platform that can then be bought by clients.
A Wealthsimple spokesperson declined to name the banks or any of the IPOs it would offer access to. She also declined to say whether the highly anticipated SpaceX IPO, which is expected within the coming weeks, would be available.
“We can only offer the deals we’re invited to participate in,” Wealthsimple says on its website without naming any of the companies.
The company also warns that clients may not get all, or any, of the shares requested if demand exceeds the shares Wealthsimple has available.
As well, clients who sell or transfer their IPO shares in the first 90 days will be barred indefinitely from future IPO access – a policy that also exists at US brokerages.
US-only IPOs will only be available to accredited investors – those who meet certain criteria for assets or income.
Venture firms using special-purpose vehicles as a way to invest in fast-growing businesses have grown in popularity with retail investors, inviting scrutiny recently.
Anthropic PBC identified a number of secondary marketplaces as unauthorised sellers of its shares.
Toronto-based Questrade is planning to launch a private markets platform this summer that will initially include pre-IPO opportunities and “institutional-grade private credit,” and later expand into other private assets, the firm said.
It has offered its launch-day access to certain IPOs since 2013, but the new pre-IPO product will “let clients buy into a company while it’s still private, months before it ever hits a public exchange,” a Questrade spokesperson clarified last Friday.
But the company is not planning to offer that type of access to the SpaceX IPO, according to chief product officer Hwan Kim, who said Questrade’s building a long-term platform, not looking to “capitalise on a single headline.”
The Elon Musk-controlled aerospace firm is generating “enormous interest, but that’s exactly when discipline matters most,” Kim said by email.
“Secondary markets for high-profile pre-IPO names can attract a lot of noise, which can lead to unintended consequences when coinciding with lock-up periods.” — Bloomberg
