The growing appeal of at-the-market offerings among emerging growth companies has introduced more competition into the micro cap financing market, particularly for investors and banks that provide structured equity lines – a segment of the market that already is highly combative. But while emerging growth companies have pared the number of equity line agreements they’re inking, the structure continues to appeal to a substantial number of issuers that need cash and that often have few other options. In some cases, ATMs have failed to live up to their billing. “It has been a little bit challenging – there certainly has been competition created by the ATM structure,” said Jason Cohen, a representative with Westlake Village, Calif.-based Financial West Group, which has facilitated five equity line deals with commitments totaling $125 million this year. “But we have found that people have had variable results with that structure and are dissatisfied because they haven’t been able to piece together capital in any predictable pattern.”
To a large degree, ATMs and equity lines provide issuers with the same benefits: They generally allow companies to raise equity in the amount and at the time of their choosing without extensive pre-deal marketing or other sales efforts.
