Key Takeaways
- Strategy has announced a proposed Initial Public Offering (IPO) for 3,500,000 shares of its Series A Perpetual Stream Preferred Stock (STRE Stock).
- The STRE Stock will offer a cumulative dividend of 10% annually, with an annual increase of 100 basis points up to a maximum of 18%. Dividends commence December 31, 2025.
- Strategy retains the discretion to buy back all STRE Stock, with redemption prices dependent on market conditions and specific tax situations.
- Retail investors in the EEA and UK are prohibited from participating in the STRE Stock offering due to regulatory restrictions.
- Leading financial institutions, including Canaccord Genuity Limited and Barclays Bank PLC, are managing the offering.
Strategy Announces Proposed STRE Stock Offering
Michael Saylor’s Strategy has officially announced its intention to launch an Initial Public Offering (IPO) for 3,500,000 shares of its Series A Perpetual Stream Preferred Stock, referred to as STRE Stock. This preferred stock is set to offer holders cumulative dividends at an annual rate of 10% of the €100 per share value. These dividends are strictly payable in cash and are scheduled to begin on December 31, 2025.
The Bitcoin treasury firm further elaborated that these dividends would be disbursed from available company funds. Payments are structured for shareholders on a quarterly basis, specifically on March 31, June 30, September 30, and December 31 of each year, contingent upon declaration by the company’s board of directors or an authorized committee. A notable feature of the STRE Stock is that its dividends are designed to increase annually by 100 basis points, up to a maximum rate of 18% per annum, for every subsequent regular dividend period.
This latest offering follows previous capital raises by Strategy. The company previously sold $2.1 billion in STRF preferred stock in May to acquire more Bitcoin and launched STRD through an IPO, which featured a 10% perpetual dividend and a Bitcoin backing of 6x. Additionally, Strategy conducted another $500 million STRC IPO in July, also to facilitate further Bitcoin acquisitions. The Stretch (STRC) preferred stock was initially priced at $90 per share.
Strategy Retains Buy-Back Rights for STRE Stock
Strategy has reserved the right, at its sole discretion, to redeem all of the outstanding STRE Stock at any time. However, this redemption in cash is conditional and will only proceed if the number of STRE Shares then outstanding is less than 25% of the total shares initially issued. The company has also stated its right to redeem all STRE Stock under specific tax-related circumstances. The final redemption price will be determined by prevailing market factors on the date of liquidation.
Prospective buyers will also have the option to request that Strategy repurchase the STRE Stock under specific circumstances, subject to certain limitations. These limitations are detailed within the Certificate of Designations that governs the STRE Stock, particularly concerning fundamental changes to the company. The initial liquidation preference for STRE Stock is set at €100 per share, effective immediately after the close of each business day, and this amount may be re-adjusted based on specified market conditions.
The offering of STRE Stock is being managed by a syndicate of prominent financial institutions. The joint book-running managers for this offering include Canaccord Genuity Limited, Barclays Bank PLC, and Morgan Stanley & Co. International plc. Additional members of the management team for this transaction are SG Americas Securities LLC, TD Securities (USA) LLC, StoneX Financial Inc., and Moelis & Company LLC.
Restrictions for EEA and UK Retail Investors
Strategy has issued a clear warning to retail investors within the European Economic Area (EEA). The company strongly advises these investors to refrain from participating in the STRE IPO and any subsequent transactions related to the STRE Stock, as defined by Article 2(e) of Regulation (EU) 2017/1129. Consequently, no prospectus or offering documentation concerning the STRE Stock will be prepared or made available for investors located in the EEA.
Similarly, retail investors in the United Kingdom have been explicitly prohibited from engaging with the STRE Stock in any capacity. The company defines a retail investor in the UK context as any individual possessing professional investment experience, as outlined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended. This also includes customers who do not meet the criteria for professional client status under the relevant Financial Services and Markets Act (FSMA) provisions.
Strategy asserts that any engagement with UK investors would contravene the UK PRIIPs Regulation. However, the firm has clarified that the intended target market for the STRE Stock is exclusively limited to those investors who are eligible under the FCA Handbook’s Conduct of Business Sourcebook (COBS). This also includes professional clients as defined by Regulation (EU) No 600/2014. Any UK distributor operating under COBS is responsible for conducting its own target market assessment.
Final Thoughts
Strategy’s proposed IPO for STRE Stock introduces a new financial product with a structured dividend plan and buy-back provisions. The firm’s strategy continues to focus on leveraging capital markets to support its Bitcoin holdings, while carefully managing regulatory compliance, particularly concerning retail investors in key jurisdictions like the EEA and the UK.