Growth Capitalist (https://growthcapitalist.com/tag/quarterly-market-review/page/3/)
China-based emerging growth companies (EGCs) are riding a wave of investor enthusiasm for Chinese internet companies led by excitement over the impending IPO of the country’s online commerce juggernaut Alibaba.
Growth issuers and investors have conducted equity private placements at a brisk pace this year, making the first quarter the most active early-year period in three years. The continued life science bull market and IPO run fueled much of the activity in growth equity private placements (EPPs) – 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 with market capitalizations from $10 million to $1 billion. However, mixed messages from the Federal Reserve about interest rates and fears about a market correction, particularly in the life science sector where investors have apparently swung to a “risk off” posture, could temper enthusiasm for EPPs in the coming weeks. While EPP deal making remained resilient through the first half of April, four companies postponed IPOs, including two biotech issuers, as broad selloffs hit the market. Growth companies raised $3.9 billion in 199 common stock, convertible and non-convertible growth EPPs in the first three months of 2014 for an average deal size of $19.6 million, according to PlacementTracker, a division of Sagient Research.
A brisk life science IPO market dented equity private placements in the sector late last year as investors displayed a preference for buying new issues.
Despite the Wall Street juggernaut that fueled hefty returns across market bellwethers as disparate as the Standard & Poor’s 500, Russell 2000 and Nasdaq Biotechnology indexes, equity private placement dollars flowing into emerging growth companies slowed in 2013 even as the number of deals ticked up from the prior year. Growth equity private placement (EPP) issuers raised $11.6 billion in 642 deals in 2013 for an average deal size of $18.1 million, according to PlacementTracker, a division of Sagient Research. Dollar volume fell by 20% versus 2012, but growth companies completed 25 more transactions. The declining dollar volume continues a several-year trend. In 2010 issuers raised $18.4 billion in 876 growth EPPs, and in 2011 they pocketed $15.2 billion in 699 deals.
