Registered direct offering
Also called: registered direct, RDO, RD offering
A sale of newly issued shares to a small group of investors arranged by a placement agent, made off an effective shelf registration so the shares are freely tradeable at closing.
Last verified
How it works
A company with an effective shelf registration agrees to sell shares directly to a few institutional investors, typically through a placement agent acting on a best-efforts basis. The deal is often negotiated and priced in a single evening, announced before the next open, and closes one or two trading days later.
Because the shares are sold off a registration statement, buyers receive registered shares that they can sell immediately. The offering is documented in a prospectus supplement, usually a 424B5, and an 8-K with the securities purchase agreement.
Common features
- A price at a discount to the last close.
- Pre-funded warrants for buyers who would exceed ownership limits.
- A concurrent private placement of unregistered warrants, sold alongside the registered shares.
- A placement agent fee plus agent warrants.
Smaller companies are limited by the baby shelf rule, so registered directs are often sized to the remaining capacity.
Worked example
Hypothetical: Company X, last close $2.50, sells 2,000,000 shares at $2.00 in a registered direct, with warrants to buy 2,000,000 more shares at $2.25. Gross proceeds are $4,000,000. With a 7% agent fee and $200,000 of expenses, net proceeds are about $3,520,000. The share count rises by 2,000,000 at closing, and the warrants add another 2,000,000 of potential shares.
Compared with a PIPE
A PIPE sells unregistered securities that must be registered for resale later; a registered direct sells registered shares at closing.
How to spot it
Watch for an 8-K or press release announcing a "registered direct offering", followed by a 424B5. See Registered directs, PIPEs and underwritten deals.
Related terms
Guides that use this term
Dilution 101 · 6 min read
Registered Direct vs PIPE vs Underwritten Offering, Compared
The three common ways small companies sell a block of shares at a fixed price, how each is registered and disclosed, and what the fees do to net proceeds.
Dilution 101 · 6 min read
How to Read a 424B5 Prospectus Supplement in Five Minutes
A section-by-section route through a 424B5, the filing that announces a shelf takedown, with the dilution table math worked out and a checklist.
Toxic financing · 6 min read
Spotting the Lender: Finding Deal Terms and Counterparties in SEC Filings
Where a financing's terms and counterparty are disclosed, from 8-K Items 1.01 and 3.02 to the securities purchase agreement exhibit, with a phrase checklist.
Toxic financing · 6 min read
Concurrent Private Placement Warrants: The Second Half of a Registered Direct
Why registered direct offerings often come with unregistered warrants in a concurrent private placement, and how to count the shares they add later.
Toxic financing · 6 min read
Reading Counterparty Disclosures: Holders, Placement Agents and Selling Shareholders
How to read the sections of a prospectus and 8-K that name who is on the other side of a financing, what they are paid, and how many shares they can sell.
Toxic financing · 5 min read
How to Measure Post-Offering Price Performance Without Fooling Yourself
A descriptive method for measuring how a stock traded after past offerings, with event dates, windows, benchmarks, and sample size caveats.
Core forms · 6 min read
8-K Item Codes Explained: What Each Item Number Means
A field guide to Form 8-K item numbers, from 1.01 material agreements to 9.01 exhibits, and the four-business-day filing rule behind them.
Core forms · 7 min read
6-K, 20-F and 40-F: How Foreign Private Issuers Report to the SEC
Why foreign companies file 6-Ks instead of 8-Ks, what the 20-F and 40-F annual reports contain, and how to read a 6-K that has no item numbers.
Core forms · 5 min read
EDGAR Search Basics: CIKs, Accession Numbers and Full-Text Search
How to find any SEC filing on EDGAR, read a CIK and an accession number, write full-text searches that work, and where Signal8's filing search fits in.
Offerings & deals · 5 min read
Form D and Regulation D: Rule 506(b), 506(c) and the 15-Day Filing
What Form D discloses, how Rule 506(b) and 506(c) private placements differ, how the 15-day deadline works, and why public companies file Form D.