The IPO Buzz: Exception to the IPO Rule

An IPO was reportedly in play.
No, it was not one of today’s marquee names such as Facebook, Groupon or Zynga. It was SQI Diagnostics (SQD), according to an IPO reporting service.
SQI is a Canadian life sciences company developing proprietary technologies and products for advanced micro-array diagnostics. Medical labs use SQI’s products to detect such chronic conditions as rheumatoid arthritis and celiac disease. SQI was aiming to raise up to US$30 million.
Its preliminary prospectus (as seen here) states, “This is the initial public offering of our common shares in the United States and includes a new issue of our common shares in Canada.”
The mere mention of an IPO got people excited.
There was just one problem. It was not actually an IPO.
Case of Mistaken IPO Identity
Reading a little deeper into the prospectus, you’d see: “Our common shares are listed and posted for trading on the TSX Venture Exchange under the symbol ‘SQD-V.’”
The first recorded trading took place on May 4, 2007.
Conclusion: You can buy all the stock you wish in Canada — ahead of its public offering in the U.S. capital markets.
This IPO thing is a general misnomer – the use of the wrong terminology involving offerings of foreign-based companies whose shares are already traded on one or more non-U.S. exchanges.
When a foreign-based company — with shares publicly traded in its own country — offers stock in the U.S. capital markets for the first time, it is a public offering — not an initial public offering, as in IPO.
Let’s flip back in time to a prominent foreign company offering its shares in the U.S. capital markets for the first time.
It was The Thomson Corporation, now Thomson-Reuters (TRI). In June 2002, Thomson was offering 38 million shares to be traded on The New York Stock Exchange. Most of the IPO reporting services called it an initial public offering, as did the NYSE. Here’s a clip from its prospectus:
“Our common shares are listed on the Toronto Stock Exchange under the symbol TOC. On June 10, 2002, the closing sale price of our common shares on the Toronto Stock Exchange was Cdn$46.95. Our common shares have been approved for listing on the New York Stock Exchange under the symbol TOC.”
It was a public offering, not an initial public offering.
Conclusion: You could have bought all the stock you wished in Canada — ahead of its public offering in the U.S. capital markets.
Now back to the SDI offering. The IPO reporting service said its expected date was Thursday, Sept. 26, but there is no record of it happening.
Stay tuned. 
Disclosure: Neither the author nor anyone else on the staff has a position in any stocks mentioned, nor do they trade or invest in IPOs. The author and staff do not issue advice, recommendations or opinions.