Richmond firm prepares for new investor rules

Steve Sadler, CEO of Allegiancy, a Richmond-based commercial real estate asset manager, foresees a new era for investors when the U.S. Securities and Exchange Commission announces new rules for what is known Regulation A+.

The rules are expected to be released shortly as part of the Jumpstart our Business Startups (JOBS) Act.

Allegiancy said in a press release that it plans to be one of the first companies in the nation to offer $20 million in preferred equity securities under the new rules. “Reg A+ is about giving regular folks access to investments that private-equity funds and only a handful of accredited investors have enjoyed up until now,” Sadler said in a statement.

According to Sadler, Reg A+ will increase the amount a private company can raise through a public securities offering from $5 million to $50 million in a year, as well as allowing non-accredited investors to buy in. 

Reg A+ also eliminates limits that have prevented smaller investors from gaining access to private security offerings.

An earlier entry point under the new regulations means that investors won’t have to wait for the mega initial public offerings (IPOs), like Facebook’s in 2012.

Sadler said: “If you look at the investors who make most of the money in these mega-IPOs, it’s the venture capitalists and private equity funds who got in before the company went public. Their basis price for Facebook was around 38 cents. Facebook’s IPO price was $38, and today it’s around $73.”

“Those early investors made some serious money. The average investor didn’t have the opportunity,” Sadler said. “With Reg A+, we believe they will.”