Markets
Cromwell Coulson

OTC Markets’ Coulson Testifies to House Capital Markets Committee

By |

R. Cromwell Coulson, CEO and president of OTC Markets Group (formerly the Pink Sheets), addressed the financial needs of small public companies in a June 12 presentation to the U.S. House of Representatives Capital Markets and Government Sponsored Enterprises subcommittee. The hearing was entitled, "Reducing Barriers to Capital Formation." Coulson began by outlining his primary concerns. "We want more openness so our public markets are more inclusive, we want better transparency so our public markets are better informed, and we want more connectivity so our public markets are more efficient," Coulson said. "Finally," Coulson continued, "we want to remove unneeded regulatory burdens in order to reduce the cost and complexity imposed on smaller public companies."

Markets

Premium Underpinnings: Raising Growth Capital Above Market

By |

As some private placement funds have begun to use the PIPE market as a platform to support emerging growth companies rather than a launch pad for a technical trading strategy, one would expect that more favorable issuer terms would begin to surface. In fact, a review of deals over the last few years reveals that investors are willing to pay above-market prices for a growth company’s securities about a quarter of the time – a practice that’s decidedly out of harmony with broader market tendencies. Growth Capital Investor analyzed growth equity private placements (GEPPs) from Jan 1, 2010 to May 20, 2013 using data provided by PlacementTracker, a division of Sagient Research. GEPPs are offerings of a least $1 million of stock or equity-linked debt that feature fixed purchase, conversion and warrant exercise price terms, and that are sold by companies that have market capitalizations from $10 million to $1 billion as well as a share price of at least $1 at closing. The review included unregistered and registered common stock deals that featured a premium purchase price of at least 1% and no more than 100%.

Markets
OTCQX

OTCQX: Does More Transparency Equal Better Terms?

By |

Small publicly traded growth companies inching toward a national exchange listing or looking for an alternative after delisting from one are frequently making the OTC Markets Group’s OTCQX trading platform their destination. The OTCQX tier requires companies to provide audited financial performance reports and to be advised by designated broker-dealers or law firms. That degree of transparency sets OTCQX companies apart from thousands of other unlisted issuers that trade over the counter. But when it comes to raising capital in an equity private placement (EPP), growth companies that meet the OTCQX criteria in many cases don’t accrue significantly better pricing or terms when compared with issuers on OTC trading tiers that require less transparency, according to an analysis of growth EPP trends for unlisted U.S. operating companies gleaned from PlacementTracker, Sagient Research’s EPP data service. (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. Except where noted, the analysis included companies with market capitalizations from $10 million to $1 billion.)

New York-based OTC Markets launched OTCQX in 2006 but spent the early years establishing the platform as a trading vehicle for American Depositary Receipts and ordinary shares of international companies. Over the last few years, however, the firm has focused on beefing up the roster of U.S.-based companies.

Markets
Broken PIPEs

As Balance Returns to Growth EPP Market, Traditional Unregistered PIPE Banks MIA

By |

Five years ago, in the hey-day of the hedge fund-dominated PIPE market, micro- and small-cap market placement agents competed furiously for equity private placement (EPP) business wherever they could find it. While they might be stronger in one sector over others, none of the active banking firms shied from deals in unfamiliar industries – they were seen as growth opportunities. The same held true of issuance structures. Different banks had different strengths but few ever passed on a deal due to the issuer’s structural preferences, and most offered the full palette of structural options to issuers that could command them. The only significant structural specialization developed around equity lines of credit, and to a lesser extent, alternative public offerings (APOs).