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What is a wall-crossed offer?

Capital Raising

Last updated 3 years ago

What is a wall-crossed offer?

Wall-crossing is used to collect early interest for capital raises. It is important that investors understand the obligations of this process before entering into an agreement.

"Wall-crossing" refers to the process of giving investors advance or inside information about a publicly traded company. Investors are wall-crossed and bound to confidentiality so that no trading occurs in an uninformed market.

The terminology is based on the traditional "Chinese wall" in an investment bank where the flow of information between the corporate team (the dealmakers) and the brokerage desk (sales) is filtered. This is so that inside knowledge that dealmakers have about upcoming news or capital raises is not accessible to the sales side of the business who are involved in active trading.

Before most capital raises, companies and their brokers will engage in "wall-crossing". They will go to certain investors and groups and ask them to agree to confidentiality so that they can discuss details of an upcoming capital raise. Once investors are wall-crossed the company and their broker will be able to collect interest and early bidding from the investors. This process helps the company get feedback on their raise, make sure the pricing is correct, and confirm that there is sufficient interest.

If you are involved in a wall-crossing for a capital raise, the process will generally be as follows:

1. When being invited to "come over the wall", you will be presented with a "no-name" description of the wall-crossing subject. Instead of mentioning the specific name of a company you will be given broad details about the sector and size. For example - "Please indicate if you would like to be wall-crossed for an upcoming offer in the small-cap Gold sector".

2. If you are interested in hearing more about the offer, you will need to confirm in writing that you agree to be wall-crossed.

3. Once you are wall-crossed you will not be able to discuss any of the information that is shared with you or trade in the company's securities until the information is made generally available or is no longer price sensitive.

4. Usually wall-crossing will mean that you have information about a capital raise, that you can then submit an early bid for. These bids are usually called a "cornerstone bid". One of the benefits of bidding early is that you will in most cases be able to secure allocation before general bidding opens.

5. Once the company enters a trading halt the placement book-build will be conducted as normal (check out

6. When the company exits the trading halt and announces the transaction to the market you will be released from your "wall-crossing" restrictions.

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