Practical Guide to New Deal Marketing

I’ve just posted to my Growth Capital site (click here) practical steps to implementing the new marketing rules permitted under the JOBS Act.

Click or copy and paste this link: http://growth-cap.com/practical-guide-to-new-deal-marketing/

 

By Dennis McCarthy

Google

Ban Lifted on Soliciting Private Offerings

Finally, we’re seeing some progress on implementation of JOBS Act provisions.

The SEC, on July 10th, voted to lift the ban on general solicitation of accredited investors in private offerings.  This has been in the works for some time as initially covered in my September post.

Additional information is available on David Feldman’s blog.

 

Post by Dennis McCarthy
Google

PIPE Investor Trend

Dennis McCarthy – (213) 222-8260 – dennis@monarchbayassociates.com

Today, a small cap public company considering raising equity may find the alternative of using a PIPE, a private investment in a public entity, to be a more attractive option.

That’s my conclusion from the 2012 tally of PIPE investors by Placement Tracker, the well-regarded source of this data.

So, here’s the background.  When I created my Equity Series of videos to help small cap public company executives to better understand the options available to them when raising equity, I created a video on PIPEs.

In my video, I said that because a PIPE is a private investment, historically, hedge funds have been the primary investors, not the larger universe of traditional institutional investors which typically invest in public securities.

Hedge funds invest in PIPEs but negotiate terms that are expensive for the issuing company.

PIPEs, therefore, have come to be considered a relatively more expensive method for a small cap public company to raise equity vs other offering alternatives.

This year, 2012, however, reveals an interesting development.  In the 2012 PIPE investor tally, produced by Placement Tracker, 10 of the top 25 PIPE investors were not hedge funds but more traditional institutional investors.

In fact, the number one PIPE investor is a traditional institutional investor, Fidelity Investments.

So today, a small cap public company’s PIPE may be sold to a larger universe of investors including those traditional institutional investors which purchase stocks on more favorable terms, such as investing at the market price without a discount and without other sweeteners such as warrants.

This is a positive development and makes the option to raise equity through a PIPE offering more attractive.  I hope this trend continues.

I’ve included a link to the online magazine, Growth Capitalist, which first tipped me to this development.  Also, I’ve provided the 2012 PIPE Investor tally from Placement Tracker as well as the link to all its 2012 tables.

As always, please contact me to help your company to raise equity or to complete any capital market project.  

2012 US PIPE Mkt Institutional Investor League Table

Growth Capitalist Article: http://www.growthcapitalist.com/?utm_source=Growth+Capitalist&utm_campaign=a7c6c3845e-RSS_EMAIL_CAMPAIGN&utm_medium=email

Placement Tracker Article: http://www.globenewswire.com/news-release/2013/01/09/515496/10017525/en/PlacementTracker-Publishes-2012-PIPE-Market-League-Tables.html

JOBS Act Progress on General Solicitation

Dennis McCarthy – (213) 222-8260 – dennis@monarchbayassociates.com

Well, I’m calling it progress.

The SEC has submitted for comment some revised rules under the recently enacted JOBS Act.

The proposed rules would permit offerings of securities which are exempt from registration, commonly known as private placements,  to be marketed more widely than is currently possible.

The current rules limit the number of potential investors that can receive the offer.  Under the proposed rules, those limits are removed.

What remains generally the same are the rules defining who can invest.  They must meet tests to qualify as accredited investors.

That’s why I call it progress as long as something like the proposed rule gets adopted.

Today, companies and their agents raising capital have the technology to reach out to just about every potential investor on the planet, so why not?

At the same time, restricting investors to those who are accredited maintains some protection for unsuitable investors.

There’s more progress needed but this is a step.  The SEC press release is available at the link below.

As always, please contact me to help your company raise equity or debt or complete M&A deals.

SEC Press Release: http://www.sec.gov/news/press/2012/2012-170.htm