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Shadarle
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Posted - 2008.04.09 06:10:00 -
[1]
I love the dutch auction method of selling shares and it is the method I would use in any future venture. It allows everyone a chance at the IPO/bond at a rate they are comfortable with or better. Here is an example:
Kwint's IPO Linky
I wonder if it could work in an IPO in a slightly different way.
Basically start out offering to pay 75% of profits in divs, you keep 25%. Let people bid on that percentage, lowering it means they get the shares before others would. So some people could say 70% and then you'd keep 30% and pay 70%, you keep this up until no new lower bids appear, then you choose the highest percentage of the lot.
Any thoughts on that?
Or is it better to let people bid on how much ISK they will give you for the shares at a set return of 50% or 75% or whatever. So start the bidding at 1b for 50% return of profits, 25% growth, 25% profit for the CEO for example. When all the shares are bid on at 1b then people start bidding 1.01 billion, etc.
My only question is where does this money go? Does it just go into the NAV? If so then they aren't really paying more as they are gaining it back in NAV. It seems like it should be a cash advance payment to the CEO. Unless the CEO is going to own 25% of the shares or some such percentage, then he is gaining money by people paying in more money.
I'm just trying to find a way for the CEO to gain advantage from this going on and on like the CEO does in a bond offering with a decreased div payout.
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Selene D'Celeste
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Posted - 2008.04.09 06:59:00 -
[2]
I think that this has potential, primarily in the bidding of lower and lower %s. How much % is reserved for personal profit or NAV growth is really up to the issuer. My biggest concern with this style is purely a clean presentation. Even with Kwint's small 3B trial run of this style, it gets messy fast as various people bit on only part of the ISK. I cannot imagine running a 20B investment in this manner without a better way of handling the process. http://www.eve-bank.netPlease visit your user settings to re-enable images.[/url] |
Kylar Renpurs
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Posted - 2008.04.09 07:05:00 -
[3]
Set a minimum block rule I guess... Please visit your user settings to re-enable images. Improve Market Competition! |
LRN
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Posted - 2008.04.09 09:07:00 -
[4]
Originally by: Kylar Renpurs Set a minimum block rule I guess...
Considering the above, I don't see why the Dutch Auction shouldn't become the method of choice for delivering bonds and shares to the public.
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MilowFV
Echo Heavy Industries
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Posted - 2008.04.09 10:43:00 -
[5]
it might be hard to follow from the top, but to check all you have to do is add from the bottom ignoring the percent they bid and just looking at the amout of the bond they are buying. Once you get to the total you can check what interest that person was at and that is the interest rate for the bond. Would work the same way for an IPO also. |
Roguehalo
Caldari RH Ship Brokers
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Posted - 2008.04.09 12:03:00 -
[6]
This would probably be the preferred method for established players with impeccable reputations.
The fact that there is too much isk chasing too few 'solid' investments opportunities means Kwint is going to get his isk at rock bottom rates.
Be interesting to find out just where rock bottom is
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Ulstan
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Posted - 2008.04.09 14:21:00 -
[7]
I like the idea greatly. It removes the "Your rates are too high/too low" complaints. Plus it's helpful to be able to see people basically stating what rates they find acceptable.
It's easier to adapt to a bond of course, but it could be adapted for an IPO. I think probably the easiest way would be through the price of the shares, as you suggest in your second example. People that are convinced an IPO would do well would be willing to pay a bit more than face value for shares, particularly if they were all used up by then.
I agree that the money shouldn't go to NAV, but rather to the CEO's wallet.
I'm sure some people would complain that it was all just a scam and ploy for more money 'up front' but there are whiners in ever crowd :p
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cosmoray
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Posted - 2008.04.09 14:46:00 -
[8]
I am a big fan of the dutch auction, including this approach or Kwint's.
What I particularly like about the auction is that it allows you to price risk. Kwint is able to get a lower rate, because he has some reputation and would be nuts to scam for 3B.
A new timer might be better starting the rate out higher say 15% per month, and see how low it goes. A higher starting point might get more action.
Just like the artificial trit cap, Ebank & Furybank set the lower limits of 3.5% (Ebank bond) and 5.6% (Fury) monthly. How close it would approach depends on the IPO launcher rep, and the 'risk taking' of the investor.
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Selene D'Celeste
Caldari The D'Celeste Trading Company
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Posted - 2008.04.09 15:59:00 -
[9]
Originally by: MilowFV it might be hard to follow from the top, but to check all you have to do is add from the bottom ignoring the percent they bid and just looking at the amout of the bond they are buying. Once you get to the total you can check what interest that person was at and that is the interest rate for the bond. Would work the same way for an IPO also.
Nice idea, but when you have a 20b IPO or Bond, and 15 people bidding on 200m-3b blocks spanning multiple pages, it becomes a mess. This isn't an idea-killing issue, but it would be that much more fantastic if it were designed to make assessment of the current state of bids easily discernible.
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Kwint Sommer
Lothian Quay Industries
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Posted - 2008.04.09 16:30:00 -
[10]
Originally by: Selene D'Celeste
Originally by: MilowFV it might be hard to follow from the top, but to check all you have to do is add from the bottom ignoring the percent they bid and just looking at the amout of the bond they are buying. Once you get to the total you can check what interest that person was at and that is the interest rate for the bond. Would work the same way for an IPO also.
Nice idea, but when you have a 20b IPO or Bond, and 15 people bidding on 200m-3b blocks spanning multiple pages, it becomes a mess. This isn't an idea-killing issue, but it would be that much more fantastic if it were designed to make assessment of the current state of bids easily discernible.
What we need is a little web applet in which everyone can place their bids and it lists those accepted from high to low. EBANK was saying they want to help facilitate bond sales right? Well this seems like the perfect thing for them.
As to why I did this, remember PP's thread asking what people would accept as a minimum bond value? Well, I'm conducting my own poll. Anyone care to speculate on what the final value will be?
Purchasing and Shipping Moon Minerals |
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Shadarle
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Posted - 2008.04.09 18:38:00 -
[11]
To avoid small bids split your total share offering into 5 blocks, 10 blocks, 20 blocks, etc... and then sell them in blocks. This stops someone from taking 666 shares and someone else taking 112, etc. Everyone gets 20% or 10% or 5% or some such of the company, no odd amounts of shares going around.
It also means you just have to count up to that many blocks from the bottom.
See, whoever said this forum doesn't have some useful discussions. We may have just come up with a new method many IPO's use for distributing shares. Or, rather, fine tuned... not come up with. The loan/bond that happened about a month ago was the first to use it and Kwint brought it back into our minds now.
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Shar Tegral
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Posted - 2008.04.09 21:50:00 -
[12]
Dutch Auctioning blocks of share that return differing rates is going to be a nightmare to renumerate. The only ideal way, as I see it, is for it to be a mainly repaid bond with a limited number of investors. (Going past 25 - eeek.)
The sad thing is that the in game shares system is far too limited to provide any kind of suitable support for variable return shares/bonds.
PS: At least I think I opinioned on the point being raised. I fear I may be misreading the idea(s) here.
To Shar -verb: 1 - To say what you mean. 2 - To say what it means. 3 - To say something mean.
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Kwint Sommer
Lothian Quay Industries
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Posted - 2008.04.09 21:58:00 -
[13]
Shar, even though everyone may bid a different rate, in the end they all get the same rate. Read the example in the wikipedia article I linked to. That makes it a lot more manageable and theoretically makes for more competitive bidding.
Really the only work is figuring out what is the highest accepted interest rate and a simple web applet could handle that. Hint, hint EBANK.
Purchasing and Shipping Moon Minerals |
Riethe
Fine Goods for Fine Gentlemen
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Posted - 2008.04.09 22:27:00 -
[14]
hey shadarle how are you buddy?
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TheVad
Amarr Metalworks
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Posted - 2008.04.09 23:02:00 -
[15]
Originally by: Kwint Sommer Shar, even though everyone may bid a different rate, in the end they all get the same rate. Read the example in the wikipedia article I linked to. That makes it a lot more manageable and theoretically makes for more competitive bidding.
Really the only work is figuring out what is the highest accepted interest rate and a simple web applet could handle that. Hint, hint EBANK.
Kwint, all I can say is we some REALLY REALLY cool things comming out in the next 2-3 months.
Project Manager & Chief Editor| www.eve-bank.net
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Kwint Sommer
Lothian Quay Industries
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Posted - 2008.04.09 23:34:00 -
[16]
If I were ever to do a large public venture using this system, here's what I would do:
1) setup a web applet where everyone enters their bids, it has a link to the history and shows the currently accepted bids from highest to lowest interest rate and the current rate 2) the accepted bids are the set of lowest bids that will cover the total capital sought 3) the current rate is the highest rate of the accepted bids, whatever this is when the auction ends is what every accepted bid will get, regardless of what rate they bid 4) if I'm doing it all in one big offer, I'll just issue bonds like usual if it may have multiple issues, I'll issue bonds based on what they should get so if there's a 90-day bond at 20% a 100M investor would get 120 shares and if I made an additional offer 30 days later they would be 60-day bonds and a 100M investor at 12% would get 112 shares in the same company. They would both get paid out via shares at the end of the term.
That should make for a pretty simple system to administer plus the investors will have shares they can trade which should make long-term bonds (the kind that payout at the end) more appealing.
Purchasing and Shipping Moon Minerals |
Selene D'Celeste
Caldari The D'Celeste Trading Company
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Posted - 2008.04.10 01:49:00 -
[17]
Originally by: Shadarle To avoid small bids split your total share offering into 5 blocks, 10 blocks, 20 blocks, etc... and then sell them in blocks. This stops someone from taking 666 shares and someone else taking 112, etc. Everyone gets 20% or 10% or 5% or some such of the company, no odd amounts of shares going around.
It also means you just have to count up to that many blocks from the bottom.
See, whoever said this forum doesn't have some useful discussions. We may have just come up with a new method many IPO's use for distributing shares. Or, rather, fine tuned... not come up with. The loan/bond that happened about a month ago was the first to use it and Kwint brought it back into our minds now.
This would be perfectly reasonable and allow some flexibility. And yes, we do have good discussions unless we get sidetracked by the local sideshows, as happens all too often.
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TheVad
Amarr Metalworks
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Posted - 2008.04.10 02:46:00 -
[18]
Edited by: TheVad on 10/04/2008 02:48:59
Originally by: Shadarle To avoid small bids split your total share offering into 5 blocks, 10 blocks, 20 blocks, etc... and then sell them in blocks. This stops someone from taking 666 shares and someone else taking 112, etc. Everyone gets 20% or 10% or 5% or some such of the company, no odd amounts of shares going around.
It also means you just have to count up to that many blocks from the bottom.
See, whoever said this forum doesn't have some useful discussions. We may have just come up with a new method many IPO's use for distributing shares. Or, rather, fine tuned... not come up with. The loan/bond that happened about a month ago was the first to use it and Kwint brought it back into our minds now.
Ohh once in a blue moon something good comes out. I tend to live by the 80/20 rule. You be surprised what happens when a community works together and supports each other.
Now if we could only rally behind a CSM candidate who can articulate his thoughts well, has vision on what improvements can be made to the industrial and market aspects of the game, I will be impressed. Finding someone who possesses thought leadership, is respected as a consultant by CCP, and has new innovative ideas might be hard to find (but not impossible).
Project Manager & Chief Editor| www.eve-bank.net
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Kwint Sommer
Lothian Quay Industries
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Posted - 2008.04.10 02:56:00 -
[19]
Originally by: TheVad
Now if we could only rally behind a CSM candidate who...has vision on what improvements can be made to the industrial and market aspects of the game....
Honestly, we need to answer that question for ourselves before we start asking candidates what they're going to do. We've had some discussion about it but I don't recall seeing a spectacular solution to the lack of high-end industrial content. Having NPC's auction off some more T2 BPO's would be nice but by no means a complete solution....
Purchasing and Shipping Moon Minerals |
TheVad
Amarr Metalworks
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Posted - 2008.04.10 03:08:00 -
[20]
Originally by: Kwint Sommer
Originally by: TheVad
Now if we could only rally behind a CSM candidate who...has vision on what improvements can be made to the industrial and market aspects of the game....
Honestly, we need to answer that question for ourselves before we start asking candidates what they're going to do. We've had some discussion about it but I don't recall seeing a spectacular solution to the lack of high-end industrial content. Having NPC's auction off some more T2 BPO's would be nice but by no means a complete solution....
IĈm talking way beyond just current issues/improvements. IĈm talking about making innovation, actually enhancing the market system, capabilities, etc. A thought leader.
http://en.wikipedia.org/wiki/Thought_leader . Just for those not familar with the term.
Project Manager & Chief Editor| www.eve-bank.net
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Selene D'Celeste
Caldari The D'Celeste Trading Company
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Posted - 2008.04.10 03:40:00 -
[21]
Continuing this tangent, it's not too hard, we just need to pick someone reasonable and pool together our ideas in community discussion threads. Fight there. Easy as 3.14159265 ...
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Raskor
Crossflow Enterprises
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Posted - 2008.04.10 04:53:00 -
[22]
I like this model because I think it favors the smaller investor. Some fat cat comes in and wants the whole pie; I can easily under bid him and steal a small slice. It also gives late comers a chance since it isn't so much about first come first served.
I think the biggest hurdle is educating the public about how the concept works. Take my example, I bid 10% for a small slice of the pie (100m). Even though my bid was a full point below the next higher bid, this gives me a good shot at getting a piece of the action and likely at a better rate. But then another person comes along and under bids me, asking for 1b at 9.9%.
Now, it is possible that this person's rationale was the same as mine; bid at the lowest you are willing to accept and hope to guarantee a spot but execute at a better rate. However, I think more likely this person didn't understand the concept and thought they needed to under bid me, when in fact they only needed to beat the 11.4% bids.
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Bloody Rabbit
State War Academy
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Posted - 2008.04.10 05:32:00 -
[23]
This looks like the auctions for the T-bill and other securities.
I would break it up in blocks of 1 billion just so that its easy and most of the players who invest have that so its a nice fair number.
Anyways, I will post tomorrow when I have more time to go into detail but it will only be on the auctions in the real world and how they work.
Link to the US Treasury:http://www.treasurydirect.gov
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MilowFV
Echo Heavy Industries
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Posted - 2008.04.10 06:13:00 -
[24]
Quote: Nice idea, but when you have a 20b IPO or Bond, and 15 people bidding on 200m-3b blocks spanning multiple pages, it becomes a mess. This isn't an idea-killing issue, but it would be that much more fantastic if it were designed to make assessment of the current state of bids easily discernible.
yes I agree with you that it be a pain in the ass to track a larger offering like that. I hadnt really given that much though. I do think Shadarle idea of limiting the how small teh amount that you can bid on would counter much of the problem. Also like the idea of applet or something to use in the bidding.
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Roguehalo
Caldari RH Ship Brokers
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Posted - 2008.04.10 06:26:00 -
[25]
It isn't a pain at all.
You just add up the lowest bids that total the investment offered and the final price is the highest of those bids. It's quite simple once you have got to grips with the concept.
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Mensageiro Cai
Project 1.5
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Posted - 2008.04.10 08:01:00 -
[26]
I've been toying with this idea for my capital injection. I like the idea of getting the best possible rate for my money, whilst introducing an element of competition.
My IPO sold out within no time at all and I know of several individuals that missed my offering due to differing time zones, and this would allow everybody a fair shot at investing.
Expect an announcement soon from me :) |
MilowFV
Echo Heavy Industries
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Posted - 2008.04.10 09:23:00 -
[27]
I think she(Selene) was saying that if you had a large IPO and the bids ran over 4 or 5 page with folks making 50 million and 20 million bids that you would reach the point where you have alot of bids to add up and could miss some while doing it. Shardarle idea of limiting the lower limit of how small a bid you could place would limit this though.
Of course it is just going thru a post and adding up number, and when you reach the total looking at what the highest interest rate bid was. I still have to agree with Selene again that if I have folks making lot of bids all at different rates though out that it can get messy. It certainly woudnt be impossible to do, but I still think I would add some limits on the size of bids to just to control the number myself.
Really it just an opinion on what someone considers to be a pain to deal with is all. I dont think I would like to wade thru 5 or more page looking at bids from 10 million to 100 million all at different rates that might be out of order or even higher then the rates above them.
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TheVad
Amarr Metalworks
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Posted - 2008.04.10 11:28:00 -
[28]
Edited by: TheVad on 10/04/2008 11:32:28
Originally by: MilowFV I think she(Selene) was saying that if you had a large IPO and the bids ran over 4 or 5 page with folks making 50 million and 20 million bids that you would reach the point where you have alot of bids to add up and could miss some while doing it. Shardarle idea of limiting the lower limit of how small a bid you could place would limit this though.
Of course it is just going thru a post and adding up number, and when you reach the total looking at what the highest interest rate bid was. I still have to agree with Selene again that if I have folks making lot of bids all at different rates though out that it can get messy. It certainly woudnt be impossible to do, but I still think I would add some limits on the size of bids to just to control the number myself.
Really it just an opinion on what someone considers to be a pain to deal with is all. I dont think I would like to wade thru 5 or more page looking at bids from 10 million to 100 million all at different rates that might be out of order or even higher then the rates above them.
Use something like handy dandy excel spreadsheet.
1) Look at thread list and for each post Plug name in column 1, plug bid in column 2 2) Sort by amount 3) Add calculations or use template which will calculate the final interest rate for you. 4) Post listing so that other people can verify and validate.
Done.
P.S Yes, you could fat finger an amount or name. You might even miss a name. But by posting you should be able to catch any errors. An entry form and a tool would remove the need for double entry and any errors. This could also enable someone to have variations like limiting the total buyer pool to X number of people up front.
Project Manager & Chief Editor| www.eve-bank.net
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TheVad
Amarr Metalworks
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Posted - 2008.04.10 12:40:00 -
[29]
Edited by: TheVad on 10/04/2008 12:42:53
An issue has arisen around the fact that an IPO offering should not raising more money then they need. So I am proposing a slight modification:
Using Kwint's example, suppose the sponsor of the issuance is seeking to raise $10 billion for 12 months with a maximum rate (starting) bid of 5.20% and in aggregate the bids are as follows:
John @ $1.0 billion at 5.115% Jill @ $2.5 billion at 5.120% Mike@ $3.5 billion at 5.125% Grant@ $4.5 billion at 5.130% Susan@ $3.75 billion at 5.135% Danny@ $2.75 billion at 5.140% Ron@ $1.50 billion at 5.145%
The interest is set based on the highest interest rate that crosses the 10B threshold. In this case its 5.130% (going from lowest to highest interest rate). Now we have the interest rate set.
John @ $1.0 billion at 5.115% Jill @ $2.5 billion at 5.120% Mike@ $3.5 billion at 5.125% Grant@ $4.5 billion at 5.130%
Then you give shares out in the same order with the set rate of 5.130%
So now:
John will get 1B worth of shares @ 5.130% Jill with get 2.5 billion worth of shares @ 5.130% Mike will get 3.5 billion worth of shares @ 5.130% and... Grant will only get 3.0 billion worth of shares (out of the 4.5B he bid for)@ 5.130%
Summary 10B worth of shares raised at a competitive rate of 5.130% interest rate for all shares. This allows the issuance to obtain the best interest rate for the 10B he needs to raise. It dosent allow everyone who participated to get shares, but rather the individuals who gave the lowest bid(s) up to the amount needed to be raised.
Project Manager & Chief Editor| www.eve-bank.net
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TheVad
Amarr Metalworks
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Posted - 2008.04.10 13:54:00 -
[30]
OpenIPO is an interesting idea as well. See the flash demo. This would require a tool however to administer correctly. Its very similar to what I posted except I avoided the complexities of porta allocation until a tool is created. I award 100% from the lowest up to the highest bid. The highest bid (at which the interest rate is set) usually dosent get all the shares they bid for.
http://www.wrhambrecht.com/ind/auctions/openipo/index.html#
Project Manager & Chief Editor| www.eve-bank.net
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