Markets
Biotech

Focus on IPOs Dents Life Science EPP Dollar Volume

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In a year shaping up to be known as “life science bulls gone wild,” a fervor that has fueled a gusher of initial public offerings and rising stock prices, publicly traded growth companies in the industry will end 2013 with fewer equity private placement dollars despite brisk deal making. Biotech and pharmaceutical companies raised $2.7 billion in 120 growth EPP transactions for an average of $22.5 million per deal through early December in 2013, according to PlacementTracker, a service of Sagient Research. That’s a substantial decrease from the $4.1 billion that the issuers raised in 134 placements for an average of $30.6 million in all of 2012. (Growth EPPs are offerings of a least $1 million of stock or equity-linked debt that feature fixed purchase, conversion and warrant exercise price terms. The data includes only growth companies that have market capitalizations from $10 million to $1 billion and a share price of at least $1 at closing.)

Follow-on offerings also have outpaced private placements: Biotech and pharmaceutical issuers have raised nearly $2 billion in 33 transactions this year versus $887 million in 16 deals in 2012, according to PlacementTracker. Yet biotech and pharmaceutical issuers continued to increase their use of at-the-market offerings in 2013, giving them more flexibility to raise cash in the coming months.

Executive Moves

Growth Capital Executive Moves

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SEC Names Abero to Head Small Business Policy Office

The Securities and Exchange Commission has named Sebastian Gomez Abero as chief of the Office of Small Business Policy. The appointment is effective immediately. Mr. Gomez previously was a special counsel in the Office of Chief Counsel of the SEC’s Division of Corporation Finance, where he played a key role in drafting proposed rules to implement the crowdfunding provisions of the Jumpstart Our Business Startups (JOBS) Act. He succeeds Gerald  J. Laporte, who retired in July after heading the Office of Small Business Policy for more than a decade. Houlihan Lokey Hires Liquidation Specialist from PAM

Houlihan Lokey named Harry Green as a director with a primary focus on transaction execution, further strengthening IFA’s senior execution capabilities.

Markets

Lesser-Known and Established Funds Differ on Ads

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Private funds received the same marketing freedoms as operating companies and startups when the Securities and Exchange Commission lifted the ban on general solicitation in September. But while small business proponents heralded the ban’s end as a transformative capital raising event, private funds have remained a bit more circumspect. A review of Form D submissions over the last several weeks indicates that while it’s not uncommon to see two or three fund filings each day declaring that sponsors have elected to use general solicitation by checking the Rule 506(c) box, most pooled investment funds continue to conduct offerings without the broad marketing option. Observers largely agree that emerging or lesser-known midlevel managers are most likely to market their offerings initially. At some point, however, large funds will begin to advertise in an effort to enhance their brand, they maintain.

Markets
ACE NYSE

Exchanges Gear Up to Help Private Companies Raise Capital

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The NYSE Euronext is making a move to help private emerging growth companies raise capital. After a lengthy search the exchange chose an unknown technology company to partner with called ACE that was started by three Citibank executives. The goal is to show accredited investors a variety of companies looking for nearly any type of financing via an online marketplace. Peter Williams, CEO of ACE, told Growth Capital Investor he thinks if he can show investors some transparency about how the issuers are building their business and growing their revenue his platform will create an opportunity for small cap companies to successfully complete financing because their deals will reach more investors. ACE’s challenge was to convince midsize investment banks to share their deal flow opportunities, in a business characterized by backroom dealmaking and secrecy controlled by placement agents and their favored investor groups.