Markets

Real Estate Platforms Driving Private Securities Transactions

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Six months after the Securities and Exchange Commission lifted the ban on general solicitation in Regulation D offerings, adoption of the practice remains muted among many industries thanks in large part to concerns over the requirement that issuers verify investor accreditation. Yet that hurdle, and the SEC’s plodding pace to adopt JOBS Act Title III rules that would open up crowdfunding to all investors, have done little to slow a ramp up of real estate private placement platforms.

While websites such as AngelList and EquityNet largely aim to help fledgling companies or entrepreneurs get off the ground, real estate portals are pursuing a broad range of strategies, from selling slivers of small loans to rehab single-family homes to raising millions of dollars to finance development. The platforms typically charge administration fees to investors or issuers. The platforms are also employing a variety of business models. New York-based Propellr, which officially launched last month, curates deals and plows 10% alongside its investors.

Markets

PIPEs for Smoking Pot (Stocks)

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The smoke furling off of joints in a growing number of states and the federal government’s increasingly laissez faire posture concerning pot’s illegality are juicing momentum for a crop of issuers looking to take advantage of the budding marijuana industry. Despite unease about ex-convicts involved in some companies, the undeniable capacity for rampant fraud, and federal government’s ultimate reaction – under federal law, marijuana use for any purpose is still illegal – publicly traded marijuana issuers have begun to find an audience among investors. Eight companies linked to the marijuana trade have raised $31.6 million in nine equity private placements since the beginning of 2013, according to PlacementTracker, a division of Sagient Research. Over the same period, Seattle-based plant extract supplier Plandai Biotechnology (PLPL) and Irvine, Calif.-based indoor agriculture equipment supplier Terra Tech Corp. (TRTC) agreed to equity lines with potential drawdowns of $15.3 million and $5 million, respectively.

Markets

Hennessy SPAC Raises $115M in IPO

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Daniel J. Hennessy
Hennessy Capital Acquisition Corp. (HCACU) is the first SPAC of the year, successfully completing an IPO in late January that raised $115 million after underwriter Deutsche Bank exercised its over-allotment on the company’s initial $100 million public offering. The offering was structured as units offered at $10 each consisting of one share of the company's common stock and one warrant to purchase one half of one share of common stock at an exercise price of $5.75 per half share ($11.50 per full share). Deutsche Bank Securities acted as the sole book runner for the offering. The SPAC is led by Daniel J. Hennessy, a longtime partner of the Chicago-based private equity firm Code Hennessy and Simmons (CHS), where is the lead partner for industrial, infrastructure and energy investments.

Markets

2013 Growth EPP Activity Marked by Hesitant Investors

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Despite the Wall Street juggernaut that fueled hefty returns across market bellwethers as disparate as the Standard & Poor’s 500, Russell 2000 and Nasdaq Biotechnology indexes, equity private placement dollars flowing into emerging growth companies slowed in 2013 even as the number of deals ticked up from the prior year. Growth equity private placement (EPP) issuers raised $11.6 billion in 642 deals in 2013 for an average deal size of $18.1 million, according to PlacementTracker, a division of Sagient Research. Dollar volume fell by 20% versus 2012, but growth companies completed 25 more transactions. The declining dollar volume continues a several-year trend. In 2010 issuers raised $18.4 billion in 876 growth EPPs, and in 2011 they pocketed $15.2 billion in 699 deals.