RE/MAX, a giant franchisor of real estate brokerage, is moving into the IPO neighborhood. The company has publicly filed a registration statement for a proposed initial public offering of $100 million in common stock. The made the move after competitors -- Realogy, Zillow and Trulia -- have had strong post-IPO performances in the market.
In-house counsel in the real estate sector should recognize the filing as a strategy for investors to gain exposure to the recovering housing market.
RE/MAX has held the number one market share in the U.S. and Canada since 1999. The timing, number of shares to be offered and the price range for the offering have not been determined. RE/MAX intends to apply to list its common stock on the New York Stock Exchange, according to the company's press release.
The registration statement has been filed with the SEC, but it's not effective yet. Previously, the registration statement had been submitted confidentially under the Jumpstart Our Business Startups (JOBS) Act of 2012.
The JOBS Act opened the door to a variety of funding options by simplifying (and lowering) the disclosure requirements. The Act allows startups to publicly sell stakes in their private companies, and allow crowdfunding for the company itself, rather than for a product or project.
But you can't sell the securities when you submit the registration statement under the JOBS Act -- only the SEC can give the registration statement the green light to open for trading business. The offering itself will be made through a prospectus.
The offering will put control of RE/MAX in the hands of a select few companies, which will own all of the Class B shares. Owners of Class B stock get two votes per share, compared to a single vote for Class A stockholders.
The breakdown of the percentage ownership in the Class B shares isn't clear yet, but RIHI Inc. and Weston Presidio V LP will have the voting power that comes from that class of stock, reports the Denver Business Journal.
RE/MAX intends to use some of the proceeds of the offering to expand by acquiring regional franchise rights in Southwest and Central Atlantic United States.
Since RE/MAX is willing to shoulder sky-high IPO legal fees, in-house counsel in the real estate arena may want to take RE/MAX's move as a cue to take advantage of the recovering housing market. It seems things are finally looking up.
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