Deals

Rollup King Returns to SPAC Market with Eyes on Mobile Advertising

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Jonathan Ledecky is making a big bet investing in mobile advertising. The king of the rollup has reentered the public markets, setting aside millions to re-launch his ill-fated Ascend Acquisition Corp. (ASCQ) SPAC and fund a reverse merger with Kitara Media and New York Publishing Group. The deal, which closed July 1, marks Ledecky’s return to the SPAC market after a five-year hiatus, and the first SPAC focused on investing in companies in the global online advertising and exchange space. Ledecky found a marquee name in the digital ad space to steer his investment vehicle.

Markets

Sponsored Deals Recovering from Slow Q1

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After a slow 2013 first quarter, sponsored growth equity private placements – deals taken by long-only fundamental investors such as venture capital, private equity, corporations, endowments, pension and mutual funds, generated more deals and more dollars in the second quarter. Sponsor investors in the second quarter include middle market PE firm GCP Capital Partners, Silicon Valley Bank, venture capital investor Oxford Finance Corp., institutional advisor MidCap Financial, John Hancock Regional Bank Fund, Fidelity Securities, Kaiser Permanente Ventures, CMEA, Bessemer Investment Management and Morgan Stanley Wealth Management. Sponsors active in the first quarter included pharma buyout specialist Frost Group, energy investor Natural Gas Partners, storied tech VC Kleiner Perkins, multi-stage VC firm Oak Investment Partners, long-biased hedge fund Aspire Capital, business development company Hercules Technology Growth Capital (HTGC), the Janus and Legg Mason mutual funds, and China sovereign fund CITIC Capital. Some 71 sponsored transactions in the second quarter raised $1.94 billion, or about four times as much as a mere 26 sponsored deals raised in the previous quarter. In the first quarter, the 26 sponsored deals raised only $480 million, representing just 10% of the deal activity and less than 7% of the capital raised in the broader equity private placement (EPP) market of 252 offerings that raised $7.23 billion.

Legal

Judge Limits Yuhe International Investor Suit against Underwriters

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The underwriters of a $40 million secondary offering in 2010 from chicken breeding company Yuhe International (YUII) are seeking the dismissal of a class action suit that claims they should have known about the company's alleged diversion of over $12 million. The court heard oral argument held last week, when counsel for underwriters including Rodman & Renshaw and Brean, Murray, Carret & Co. asked that the case against them be tossed out. A court ruling on July 10 whittled down the investors' claims to those involving five particular chicken farms Yuhe claimed to have under operation. The case against the underwriters was filed in a Los Angeles U.S. District Court, where the action by plaintiff aAd Partners LP was consolidated with the investor class action suit filed by Jeff Feyko.

Markets

Market Wobbles Fail to Deter Deals

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The recent spike in market volatility over the past few weeks has yet to temper the bullishness of growth companies, investors or bankers in what so far has been a robust year of private placement deal making. The pace of transactions remained steady in June despite a 500-point drop in the Dow Jones Industrial Average to begin the month. That was followed by a mid-month seesaw ride that led to a 760-point drop over two-and-a-half days and then a strong rebound in the final week. Companies raised about $1.1 billion in 33 growth equity private placement transactions (GEPPs) in June through the final trading day of the month, according to PlacementTracker, a division of Sagient Research. Additionally, eight growth issuers established at-the-market agreements that could raise a potential $370 million.