when will freetrade IPO?
We don’t have any plans to IPO right now, although it’s an option that we’re very open to, once we’ve grown a little bigger.
We’ll be sure to let you know if / when it’s about to happen
Need to wait until this funding round is over first!
Question: EIS requires you to hold on to your shares for 3 years I believe, what happens if a company does an IPO before that time is up?
You don’t have to sell if they IPO do you? Can’t you just hold them? I doubt freetrade will ipo within 3 years anyway.
You lose any eis relief you’ve gained via paye (have to pay it back) and will be liable for capital gains tax IF you decide to sell on ipo (or if they are bought out). Otherwise just hold until the 3 years.
Edited to make sure I don’t confuse anyone.
I think Kenny is right, as long as you don’t sell your shares straight away you should be OK. It would be another matter if Freetrade sold out to a bigger firm before the three years were up, as you most likely wouldn’t get the option to keep the shares
Sorry yeah you’re right. Only lose if you sell within the 3 years. You can still choose to hold the shares if they ipo.
If FreeTrade IPOs before that time it is likely that Crowdcube, who will probably have your investment in a nominee account will elect to sell your shares on your behalf. This means you will lose EIS. 3 years would be an aggressive timeline for Freetrade, so I think you should be safe. If they are IPO-ing in 2 years as opposed to 4, I would suspect you IRR would still be pretty juicy after tax (Remember you get £10k CGT allowance per tax year).
12k cgt now i think
Really? I’d of thought we could keep hold of the shares through the IPO?
Anyone here experienced an IPO with crowdcube? I’m curious how they normally approach it (forced sale or choice of sale or hold). I think they’d have to ask shareholder permission either way?
We’re getting a little ahead of ourselves here Freetrade has no IPO plans.
I’d be very surprised if the dynamic team would plan to cash in within 3 years. There is still a lot to do and they have grant expansion plans. I’d imagine the team - who are still fairly youthful but who will be working crazy hours have an early retirement plan, but I’m sure there is a 10 year exit plan. So I think any EIS shares (if it qualifies) this round won’t be at risk. I wouldn’t be so sure in 3 years time. However, in 3 years time Freetrade definitely won’t qualify for EIS so I’m not worried.
I believe if a company floats on AIM rather than the main market then EIS relief is not lost unless the shares have been held for less than three years. Weswap.com, which crowdfunded on Seedrs were supposed to come to the AIM market in December but delayed it due to market conditions.
Your shares are not/will not be held under the Crowdcube nominee. Any shares previously held, or purchased in this upcoming round, are held in Freetrade directly.
I hope this helps, but please let me know if you have any further queries.
Freetrade shares displayed in app coming soon?
That’s really helpful - thanks Hannah!
I do wonder which will he one of the first big UK fintechs to IPO. I.e. revoult, monzo, free trade etc.
I’m guessing Revoult, I think they have the most VC backing (freetrade and monzo are primarily crowd funded) so I think they will be underpressure to IPO sooner - just look at softbank and we work (also the company was never ever viable)
I agree with you there Gaz they’re in talks “apparently” to raise $1.5B and with their Mastercard expansion in the US I’d say they’re ahead of the others. Monzo won’t IPO before them, Monzo are limited to UK
Monzo is also in the US now with their beta version.