How Preferred Shares Work: 3 Case Studies from Global Practice

As part of its reorganization, DigiU is holding three snapshots of preferred shares. DigiU’s CEO Alexey Ognev discussed the ecosystem reorganization in detail during a webinar on 10.04.2025.

This approach is commonly used globally during a company’s scaling phase. Let’s explore 3 case studies where preferred shares were key to stability and effective capital raising:

Goldman Sachs and Berkshire Hathaway (2008)

During the financial crisis, Goldman Sachs secured $5 billion from Berkshire Hathaway. The structure included preferred shares with a 10% yield and warrants to purchase common stock. The deal restored market confidence in the bank.

Outcome: Goldman bought back the shares, and Berkshire earned over $3 billion.

Benefits for investors:

• Fixed 10% annual return.
• Priority in dividend payments.
• Access to warrants and capital growth.
• Participation in saving a systemic company without losing liquidity.

Facebook and Venture Capitalists (2004–2006)

Facebook raised funds from Accel Partners and Peter Thiel through preferred share issuances. In 2004, Peter Thiel invested $500,000, acquiring a 10.2% stake in the company via preferred shares. In 2005, Accel Partners invested $12.7 million at a $98 million valuation. Investors received liquidation preferences, anti-dilution protections, and governance rights.

Outcome: Facebook retained control, and investors gained substantial returns after the IPO.

Benefits for investors:

• Pre-emptive rights upon exit (liquidation preferences).
• Protection against share dilution.
• Opportunity to participate in governance.
• Share value growth after the IPO.

The last case in our selection is the most recent.

Chobani and HOOPP Pension Fund (2024)

In 2024, Chobani bought back some preferred shares previously issued to HOOPP. The deal was financed through a $650 million bond issuance with an 8.75-9.5% yield (Senior PIK Toggle Notes). This restructuring reduced capital costs and strengthened the financial balance.

Outcome: Financial stability without share dilution.

Benefits for investors:

• Access to corporate debt with payment priority.
• Capital protection through share buyback.
• Strategic involvement without operational control.
• Reliable partner (institutional pension fund).

These cases demonstrate that preferred shares serve as a sustainable investment tool. The full list of privileges will be published by 01.07.2025.

Review the details and participate in the second snapshot – you have until 31.05.2025, 23:59 (UTC).

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