Legal

Court Won’t Toss AutoChina Manipulation Case

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AutoChina International (AUTCF) asked a Massachusetts federal court to toss out a complaint brought by the SEC in April 2012 alleging that the company used $60 million in cash to trade up its stock and create the appearance of liquidity, but the court rejected AutoChina’s venue arguments. The suit was filed in Boston’s U.S. District Court. China-based auto leasing and service provider AutoChina obtained $70 million in PIPE financing in March of 2010 according to PlacementTracker data. Rodman & Renshaw and co-agent Chardan Capital Markets placed the deal, which included investors Stratus Capital Management, Millennium Management and GCA Strategic Fund Ltd. Law firm Loeb & Loeb represented the issuer.

Markets

Growth Equity Investors Dominate 2012 EPP Market

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Fundamental investment-oriented growth equity investors increasingly replaced trading-oriented funds as leaders in the equity private placement (EPP) market in 2012, marking a changing of the guard in an area of the capital markets critical to the development of emerging growth companies. For the first time since the dawn of the PIPE (private investment in public equity) market in the mid-1990s, a long-only mutual fund manager led the market in total deals and total investment among active investors, usurping the fast-money hedge funds that had long dominated the market. Fidelity Management & Research invested $190.7 million in 45 equity private placements in 2012, making the mutual fund behemoth the leading active investor in the market in both number of deals and total investment, according to market monitor PlacementTracker. But Fidelity was not alone among fundamental-oriented investors making their way up the PIPE ranking lists last year. Of the top 25 investors in the market, at least 10 are generally regarded as long-only, fundamental-focused mutual and venture capital fund managers, including insurance and annuity giant TIAA, Wellington Management, Columbia Management, T. Rowe Price, and Orbimed Advisors.

Markets

Emerging Growth Companies Lead IPO Market

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Most of the JOBS Act provisions intended to facilitate capital formation are still in limbo nearly a year after the law passed and despite congressional pressure on the Securities and Exchange Commission to stop dragging its feet. But small issuers have aggressively taken advantage of the benefits available under the new Emerging Growth Company (EGC) category, a central piece of the law intended to grease the capital-formation skids for firms contemplating initial public offerings. Seventy-two EGCs raised $11.2 billion in IPOs in 2012, according to capital markets researcher Dealogic. That represented a substantial chunk of the IPO market last year: All told, issuers raised a total of $43 billion in 128 IPOs, according to Renaissance Capital Partners, a Greenwich, Conn.-based global IPO research and analysis firm. In early December, Ernst & Young reported that EGCs had filed 74% of new IPO registrations since the JOBS Act became law in April.

Markets
daVinci Capital Group

Growth Capitalist Profile: daVinci Capital Group

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Growth Capital Investor’s editors sat down with Gary Post and Robert Winter of daVinci Capital Group, a newly-launched California-based growth equity investment firm  focused on fundamental investment in public emerging growth companies under $250 million in market cap. daVinci Capital stands at the vanguard of a new breed of emerging growth investor that is seeking to employ the equity private placement market to take significant, medium to long-term stakes in small, public, high-growth companies and help steer their development into profitable, liquid, and high-value small cap companies. GCI:  Describe the structure of your firm – are you a stand-alone fund, a fund-of-funds, feeder or seed fund, a sub-advisory, or something else? POST:   daVinci is structured as a fundamental private equity investor, not a hedge fund, to provide growth capital via minority equity private placements. We are looking primarily at emerging public companies, up to about $250 million in market value, but we can also provide expansion capital to private companies.