Annual Review and Rebalancing
The Publisher annually reviews the Index Constituents to ensure all companies meeting the eligibility requirements are included and continue to represent the private growth asset class. This annual rebalancing can thus be expected to add and subtract Index Constituents from the Index. The reference date for all company-specific transaction and valuation data and other information utilized in the rebalancing process will be taken from the three months preceding the rebalancing date.
Addition of New Companies to the Index
Immediately prior to each rebalancing date, the Publisher reviews information regarding private technology company primary financings, SharesPost Financial Corporation secondary transactions, and publicly reported investors’ valuation marks. This review may reveal companies that now meet the Index’s eligibility requirements but that were not previously included in the Index. Companies qualifying in this manner will then be added to the Index and the Divisor increased by the number of companies added. The inclusion of a new Index Constituent will be announced with the release of the subsequent Index publication. The 2017 Index companies are listed here and a current list of Index Constituents is always available on the SharesPost website.
Removal of Companies From the Index
During the annual rebalancing, the Publisher also reviews Index Data to determine whether any Index companies no longer meet the eligibility requirements, either due to corporate action or for other reasons. Such companies will then be removed from the Index. Removal of a company from the Index does not require that the Publisher replace the deleted company by adding a new company to the Index. Rather, the number of Index companies and the Divisor are both reduced by one for each company removed.
The Index will be updated as a result of corporate actions (e.g., acquisition, bankruptcy, divestiture, or initial public offering) that change the composition of the Index companies. If an Index company is removed during the annual rebalancing as a result of a corporate action, the Divisor will be adjusted to maintain the Index level. Each publication of the Index will include a “distribution” line item to ensure that addition or deletion of a company from the Index due to a corporate action does not disproportionately affect the existing weightings of the Index. Any new company will be incorporated in to the Index at the annual rebalancing with a starting index value of 100, but we will add the difference between the value of the Index prior to introduction of the new company and 100 (i.e., the Index value minus 100) to the distribution line. When a company is removed from the Index, we will add the difference between its contribution to the Index and the value of the Index prior to the company’s removal to the distribution line. The sum total values of all Index companies will be added to the distribution line to determine the gross sum of the Index (numerator). See below for an example Index distribution calculation.
The Publisher intends to publish the Index every 90 days, releasing its calculations within 10 business days after the end of each calendar quarter. The Index will incorporate private growth company transactions and valuation marks that become known to the Publisher during the quarter ending 90 days prior to the most recently completed quarter.
Index Announcements and Dissemination
The SharesPost Private Growth Index is published on the SharesPost website. There, visitors can view the most recent Index announcements, download the current white paper describing the Index’s construction and maintenance, and find important legal notices and disclaimers. Also available on the website is the most recent calculation of the Index, a list of the Index companies, and commentary from SharesPost Research on the forces and events that in its view are driving the Index’s most recent results. Information pertaining to the Index will also be disseminated from time to time via email to registered SharesPost members and through content partnerships and licensing arrangements with third parties.