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.

Legal
crowdfunding

Crowdfunders Receive Blueprint

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The Securities and Exchange Commission’s 585 pages of proposed rules for crowdfunding released last month amped up the chatter from online platforms, angel investors and third party service providers catering to entrepreneurs, startups and small growth companies. Crowdfunding supporters had waited more than 18 months for a hint of what the rules would entail after the JOBS Act legalized the funding-by-the-masses concept and directed the SEC to craft the regulatory oversight. The proposal, known as Regulation CF, is broadly focused on raise and investment limits related to the incomes of non-accredited investors. Reaction has been typical: The SEC did a good job crafting some rules, and poor job on others. Among the policies put forth, the commission revealed that it would allow companies to conduct separate offerings at the same time.

Markets

Registered EPPs Move Down Market

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Registered equity private placements (EPPs) are becoming available to ever-smaller emerging growth companies, as a robust small cap market and increasing competition among placement agents for deal flow broadens the potential pool of eligible issuers. Registered EPPs, including registered direct offerings (RDOs), confidentially marketed public offerings (CMPOs) and at-the-market offerings (ATMs), are now being executed by the smallest of public companies, further diminishing the need for these companies to rely on expensive and highly dilutive PIPEs to fund their corporate development. More than $4.2 billion in growth capital has been raised in 200 registered EPPs so far this year through Nov. 1 by emerging growth companies with market caps from $10 million to $1 billion, according to data by PlacementTracker, the EPP tracking service of Sagient Research Systems. That’s a better than 10% increase in total deals closed at this time last year, when 182 offerings had been completed. Total capital raised or committed is also up compared to the year ago period, with $6.1 billion closed or committed compared to $5.9 billion a year ago.

Legal
SEC

Reg D Offerings, Online Deal Platforms Proliferate in Wake of Repeal of General Solicitation Ban

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Barely a month has passed since the SEC’s repeal of the ban on advertising Reg D private placement offerings became effective, and private placement agents have seized upon the new freedom to use online platforms to tout their deals. The agency said last week that more than $1 billion have been raised in 214 solicited private placements since the ban was officially lifted on Sept. 23. In statements to reporters following his testimony before the Senate Banking Committee, the SEC’s director of the division of corporation finance Keith Higgins said that there had been 170 news offerings that used the general solicitation safe harbor under Rule 506(c) of Regulation D to raise capital since the new rule became effective. An additional 44 offering that were commenced prior to the new rule’s effective date converted to 506(c) deals after Sept.