Preferred Shares: Global Experience
We continue to explore a financial instrument used by leading corporations for decades. The reason is simple: it provides investors with fixed income, priority in payouts, and capital protection. For businesses, it offers access to stable funding without diluting control.
Major companies using preferred shares:
Accel invested $12M in preferred shares with liquidation preference and anti-dilution protection. At IPO, returns exceeded $9B → 700X+.
- Airbnb
Early investors received participating preferred shares. Returns of 10X-20X, despite delayed IPO and market risks.
- Uber
First Round invested $1.5M in shares with buyback rights and anti-dilution protection. Exit value: $2.5B+ → 1600X.
- Bank of America
During the 2008 crisis, it issued preferred stock worth billions of dollars – investors received payouts despite the decline in common stock value.
What this means for investors in practice:
- Fixed income
Preferred shares offer predetermined returns, typically 5-8% annually, paid quarterly. Coca-Cola pays $1.75 per quarter, equating to ~5.6% annual return.
- Priority in payouts
In profit distribution or company liquidation, preferred shareholders are paid first. General Electric and Verizon have used this model for over 40 years, ensuring stability even in crises.
- Capital protection in volatile times
In 2008, Bank of America guaranteed payouts to preferred shareholders.
- Value growth + embedded rights
Investors in Facebook, Airbnb, Uber, and Palantir achieved 10X-700X returns due to preferences like:
– liquidation preference;
– participating preference;
– anti-dilution protection.
We study the best global practices and incorporate elements that have proven to deliver returns, protection, and priority to investors in real-world cases.
You can increase your portion up to 30% as part of the second snapshot, scheduled for June 1. To participate, make any share payment by 31.05.2025, 23:59 (UTC).
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