A 630-foot Ferris wheel that is currently being constructed on Staten Island is soon to be marketed through Wall Street. The project has already raised about $450 million through debt and equity, and an additional $30 million is to be raised through North Capital Private Securities.
Crowdfunding platforms have allowed individuals and companies to raise funds for varying projects from crowds that do not necessarily have prescribed economic interest in these projects. These platforms are taking advantage of the regulations within the Jumpstart Our Business Startups (JOBS Act) of 2012, which relaxed restrictions on the sale of stocks by startups.
Some of the shares in the project will be sold by brokers, as is customary, while the remainder will be sold via 99Funding to interested investors who will sign up on their own. This project was originally supported by several wealthy investors including Jeffrey Feil, Lloyd Goldman and Joseph Nakash. North Capital is also planning on bringing in other crowdfunding platforms to take part in the fundraising. The minimum investment amount on the project is expected to be between $5,000 and $10,000.
Construction of the Ferris wheel started in May after $195 million in senior debt was raised from JPMorgan Chase’s unit of Highbridge Capital Management hedge trust. An additional debt of $150 million was raised from CanAm Enterprises. CanAm Investors are set to provide another $24 million next month. The Highbridge debt has an interest rate of 10.25 percent, which may be considered a risk to the project, while the interest rate of CanAm is only 2.5 percent.
Houlihan Lokey had tried earlier to sell the wheel’s stock to round out funding, raising $31 million, but this amount was below target by $15 million. The sale was disrupted by the project leaders of New York Wheel, who had to close other financing options that Houlihan was unable to raise the remaining amount on time.
Crowdfunding is expected to increase startups’ abilities to raise funds via the internet once securities officials complete the regulatory amendments under the JOBS Act.
Crowdfunding is expected to increase startups’ abilities to raise funds via the internet once securities officials complete the regulatory amendments under the JOBS Act. This will allow companies to raise money from both accredited and unaccredited investors. However, crowdfund experts are cautioning investors not to ignore the basic risks associated with these kind of deals, especially because the investors do not usually receive an equal amount of information about profits, losses, sales and other key factors usually provided by private companies.
Note: First published in timesrealtynews.com with this link: http://timesrealtynews.com/500-million-ferris-wheel-to-be-funded-by-wall-streets-version-of-crowdfunding/