Markets
VC

Sponsors Step Back from Market in Q1

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Sponsored growth equity private placements - deals backed by long term investors such as venture capital, private equity, corporations, endowments, pension and mutual funds, generated significant deal flow in the first quarter of 2013, but at rates well below the same period a year ago. In the first quarter such investors 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. A quick look at the numbers suggests that sponsored private placements in the first quarter represented a much smaller portion of the overall PIPEs market than they did in the first quarter of 2012, but the limits of disclosed data make a direct comparison problematic. In the first quarter of 2012, some $3.3 billion from 66 sponsored PIPEs accounted for 24% of the deal activity and 48% of total PIPE volume as 278 deals brought in total capital of $6.8 billion. In the first quarter of 2013, A total of 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 EPP market of 252 offerings that raised $7.23 billion.

Deals

Car Charging Group Running on PIPE Power

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Car Charging Group (CCGI) closed its third PIPE, raising $2.5 million to fund its electric car charging services. The company said in an April 3 news release that the deal closed March 22, when undisclosed investors bought common stock at $0.50 per share, an approximate 58% discount to the market price ($1.20) at deal announcement. Investors also received 4.59 million 36-month Warrants with an exercise price of $2.25 per share (87.5% premium). (Issuer counsel was Anslow & Jaclin.)

While electric cars are becoming increasingly popular, vehicles designed without an auxiliary gas motor have limited driving range, often less than one hundred miles. Car Charging Group is working on two different ways to make charging easier for electric vehicle enthusiasts.

Legal
Corey Ribotsky

AJW Liquidators Sue NIR, Ribotsky in New York State Court

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PwC Corporate Finance and Recovery, Cayman Islands liquidators of several AJW funds managed by Corey Ribotsky and NIR Group, has sued Ribotsky and NIR for damages in the New York State Supreme Court. The move follows the liquidators’ successful attempt to obtain Chapter 15 recognition from a U.S. Bankruptcy Court in February. Funds managed by NIR, which include four AJW entities and New Millennium Capital Partners II, committed $225 million to 144 PIPEs from 1999 through 2010, according to PlacementTracker data. Ribotsky and NIR have not yet answered or responded to the New York state suit. Ribotsky has previously lodged extensive and detailed objections to allegations made by the SEC and by the liquidators in their bankruptcy case.

Legal
SEC

SEC Calls John Thomas Funds, “Independent” Agent on the Carpet

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Regulators have accused the manager of two John Thomas Bridge and Opportunity Fund (JTCM) units active in microcap finance, and affiliated PIPE placement agent John Thomas Financial (JTF), of overcharging clients, improperly paying stock promoters with fund cash, and furnishing misleading statements to clients. The Securities and Exchange Commission administrative action alleges that John Thomas fund manager George Jarkesy also yielded to unreasonable fee demands from Anastasios Belesis, CEO of JTF, which the commission says did not live up to claims that it was independent from Jarkesy’s funds. The commission alleges that Belesis often got involved in fund business and rudely demanded unyielding obedience from Jarkesy. “Numerous emails reflect Jarkesy’s subservience to Belesis and efforts to please him by offering him benefits from the Funds’ investment activities, including cash, fees and securities,” the commission says. “Nobody gets access to Tommy [Belesis] until they make us money!!!!!,” Jarkesy allegedly wrote in one communication.