MARKETING PLAN 5
Keating Capital, Inc. is a management investment company, whichfocuses on “making pre-IPO investments in growth companies that arecommitted to and capable of becoming public (EntertainmentClose-up, 2013).” Keating empowers investors with thecapability to take part in a unique fund. This makes it possible forstockholders to benefit from possible value addition, which happenswhen a company changes its status from private to become public.
The company’s objective is to capitalize on capital appreciation.The objective is accomplished through investing in later stage equitysecurities, basically venturing pre-IPO companies. Keatingconcentrates on companies within the internet and software,technology and cleantech industries, which must be private companiesand US based, in addition to having an equity value ranging from $100million to $1billion.
The strategy involves evaluating and investing companies before thevaluation accretion, which happens when private companies completetheir first public offering. The company captures the value accretionthrough investing in micro, private and small-cap companies, whichmeet specific investment criteria.
The criteria include generating yearly revenue of more than $10million in a period of 12 months and demonstrate potential forgrowth, dedicated to becoming public and have a potential ofattaining twice their return on Keating’s investment within 36months (Entertainment Close-up, 2013). Keating’s investmentstrategy is summed as buying privately, selling publicly andcapturing the difference.
The company was incorporated in 2008. It is managed externally by itsinvestment adviser, Keating Investments, is not diversified and is aclosed-end management investment. The adviser manages the dailyoperations, which include identification, analysis, negotiation,supervising and servicing the company’s investments. The mainexecutive company offices are in Colorado.
Keating benefits from monetary assistance by the government.However, the company operates in a country where income disparity isa major political issue. As it continues to generate more income, itis likely to experience more corporate taxation in America. Thecompany deals with business development. This means that it isrequired by law to adhere to specific regulatory requirements.
For example, Keating must “invest at least 70% of total assets inqualifying assets, including securities of private US companies,cash, cash equivalents, US government securities and high-qualitydebt investments,” which mature within a year. The problem is thatif less than 70% of the company’s total assets comprise ofqualifying assets, Keating will not be legally allowed to acquiremore non-qualifying assets.
Keating invests in pre-IPO companies that are private, which is arisky business endeavor that could result in the loss of investmentin their common stock. These companies have restricted operatinghistories, which are narrow, have less recognized product lines aswell as reduced market shares as compared to big companies.
Hence, the companies are susceptible to economic downturns. Thismeans that Keating could experience operating losses due to theuncertainty that the pre-IPO companies can operate profitably. Theincreasing global economic uncertainty might also lead to investorsincreased risk-aversion that may decrease available growth capital toKeating’s portfolio companies.
The portfolio companies rely on the management talents as well asefforts of a limited number of employees. Hence, the possibility ofbereavement, resigning, disability or termination of any of theseindividuals could negatively affect the portfolio company, which alsoaffects Keating.
The investment in technologically based companies poses numerousrisks to the organization. These include increased competition,volatility, technologies that have not been proven, governmentsubsidies could be lost and possible litigation.
Entertainment Close-up. (2013). Keating Capital Reports 2012.