Pre-IPO & lock-up bridges.

A pre-IPO or lock-up bridge is a Lombard loan that carries a shareholder across the period between a listing and the point they can freely sell, releasing liquidity against newly listed shares that are still subject to a lock-up. It answers a specific timing problem: the shares are now public and valued, but the holder is contractually restrained from selling, and may not wish to sell into the expiry in any case. The bridge advances cash against the position and lets the eventual exit happen on the shareholder's timing rather than the calendar's.

The lock-up gap

An initial public offering converts a private holding into listed, valued shares — and, at the same moment, restrains the holder from selling them. Lock-up undertakings given to the underwriters commonly run for a matter of months, often around six, and exist to steady the aftermarket. The effect for founders, executives, and early investors is a gap: paper wealth that is visible and priced but not yet spendable. During that gap ordinary needs do not pause — tax on the listing event, a diversification the holder has waited years to make, a personal or business commitment — and selling into the moment the lock-up lifts, when supply is heaviest and the market is watching, is rarely the exit anyone wants. The bridge closes the gap without breaking the undertaking.

What a bridge must respect

A lock-up bridge is defined by the document it must live within. Lock-up and underwriting agreements restrain sale and transfer, and many restrain the creation of a pledge as well, so the first task is to read what the shareholder has actually signed. Where a pledge is permitted, or the underwriters will consent, a facility can be secured during the lock-up; where it is not, the facility is documented to take effect on expiry. Newly public directors and senior managers pick up insider-dealing rules and closed periods, and a substantial holder may face disclosure obligations, including notification of a charge over shares. The bridge is built around these constraints, on public information only, with the shareholder's own counsel confirming what the agreements allow.

How the bridge is structured

Tenor is the defining parameter. A bridge is sized to span the remainder of the lock-up plus a sensible window beyond it, so the shareholder is never forced to act on the expiry date itself. Because the collateral is a recently listed name, the loan-to-value is set conservatively: a short trading history, unsettled free float, and elevated early volatility all argue for caution, and the position can be reassessed as the stock seasons and its liquidity deepens. Drawdown can be staged to match when the cash is actually needed. Recourse is chosen to fit the shareholder's wider objectives, and the shares are pledged to a qualified custodian under bankruptcy-remote arrangements. Pricing is the usual reference rate plus a spread, with no rate card.

After the lock-up

The value of a bridge is the optionality it preserves at the far end. When the lock-up lifts, the shareholder has three clean choices. They can repay the facility from an orderly, unhurried sale, spreading disposals over time rather than crowding the expiry. They can refinance into a longer-term Lombard facility and keep the position, having used the bridge simply to get past the constrained window. Or they can retain both the position and the facility if their plans have changed. The bridge exists so that none of these decisions is made under duress. It buys time, and time is what turns a forced exit into a chosen one.

Structuring at a glance