Keating Capital of Greenwood Village raised $86.8 million in an initial public offering completed Monday.
Proceeds of the offering will be invested in companies about to go public.
“To the best of our knowledge, Keating Capital is the only dedicated pre-IPO fund out there for individual investors,” said Tim Keating, the Greenwood Village firm’s chief executive.
Normally, getting in just ahead of an initial public offering requires knowing someone on the inside or having a sizable net worth.
Average investors can get fund shares once they start trading under the ticker KIPO in December.
Keating said the fund started in 2008, when many considered the IPO market credit crisis roadkill.
But the firm raised $5.7 million in a private placement and began a public offering in January 2010. Interest in the offering surged in recent months after investors placed stratospheric values on Facebook and Twitter, and IPOs from LinkedIn and Pandora grabbed headlines.
Keating plans to make investments in about 20 companies, targeting smaller, less costly names.
Its current investments include Solazyme, maker of biofuel from algae, and Bright Source Energy, a maker of solar concentrators.
The fund comes with risks. One is that volatility in stock markets could block IPOs and reduce the fund’s ability to turn over its investment and make a return.
The fund targets private companies within 18 months of an initial public offering with shares trading at a 50 percent or greater discount to their future public share price.
If it pays too much, returns will also suffer, the other key risk.
Investors should also be aware that the fund’s fee structure is more in line with a private equity fund than typical mutual funds.
It will charge a management fee of 2 percent and collect 20 percent of realized gains as an incentive fee.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
