A facility ready for the day the lock-up ends.

Shares under a post-IPO lock-up cannot be pledged for a Lombard loan arranged by Lombard Financing until the lock-up ends, but the facility can be prepared while it runs. The documents are reviewed and the terms prepared in advance, so the facility can be drawn once the shares are freely tradable and the holder need not sell into the expiry.

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 the lock-up 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.

Lombard Financing does not arrange facilities against the shares while the lock-up runs. What it can do is prepare a facility in that time, so that cash is available as soon as the shares are freely tradable rather than from a sale into the expiry. Before the listing, the same stake was unlisted and outside the firm’s criteria altogether, as borrowing against private company shares explains.

What the preparation must respect

Preparing a facility during a lock-up starts with the documents the shareholder has signed. 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 them. The facility is secured only once the lock-up has ended and the shares are freely tradable; how much can be agreed before then is for the shareholder’s own counsel to confirm.

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 facility is planned around these constraints, on public information only, with the shareholder's own counsel confirming what the agreements allow. Stock that is restricted for other reasons, or not yet vested, is covered in borrowing against restricted or unvested stock.

How the facility is structured

Timing is the defining parameter: the facility is prepared so that it can be drawn from the day the lock-up ends, for a tenor that runs 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

When the lock-up lifts, the shares can be pledged and the facility drawn, and the shareholder then has three clean choices: repay, refinance, or retain. 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. Or they can retain both the position and the facility if their plans have changed.

The value of preparing early is the optionality it preserves once the shares are free. The facility 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

The facility is prepared while a post-IPO lock-up runs and drawn against the newly listed shares once they are freely tradable. The shares are assessed conservatively, and the tenor runs from the end of the lock-up into free-trading time.