Friday, November 21, 2008
Alternative Capital Markets

Private Investment in Public Entity (PIPE)

SMH Capital is a leading placement agent for Private Investment in Public Entity (PIPE) with deep relationships with institutional and hedge fund investors.

We provide our issuer clients with insight into market receptivity, offering structure and valuation of equity and equity linked offerings.  As one of the more active placement agents on Wall Street, we understand market sentiment for new issues and can therefore offer superior advice to our clients in terms of transaction structure and timing.

This experience lets SMH properly structure a capital raise and target the proper investors for that structure, ultimately saving the company time and money.

Typical Structures

  • Common Stock
  • Convertible Debt
  • Convertible Preferred
  • Equity line
 

Representative Transactions

  • Gran Tierra Energy:
    Common Stock with Warrents, $75m, Co-Placement Agent (press release, case study)
  • United Fuel & Energy:
    Convertible Preferred Stock, $14.8m, Placement Agent
  • Houston American Energy:
    Common Stock, $16.6m, Placement Agent
  • MRU

(view recent transactions)

Accomplishments

  • Managed over 60 PIPEs since 2001,
    raising in excess of $1.3 billion
  • Ranked the No. 1 U.S. Placement Agent for E&P PIPE transactions in 2006 (1)

 

 

A PIPE is a Private Investment in a Public Equity, in which accredited investors purchase stock in a public company through a private placement. Higher quality companies and investors continue to be attracted to this highly flexible and rapid financing option for smaller companies. Through October 1st , 2007, 1428 deals raised $36.7 bn. For companies with less than $250m in market cap, over 90% of the capital raised was done as a PIPE.

 
Rule 144 A
 

U.S. Securities and Exchange Commission (SEC) Rule 144A allows for the immediate resale of private placement securities among Qualified Institutional Buyers “QIBs”, institutions that manage at least $100M in securities, without requiring public registration.

 
144A Market. Private placements done under rule 144A exempt companies from financial reporting regulations, including stricter accounting reviews mandated by Sarbanes-Oxley. This allows Private placements under Rule 144a to be executed more quickly and less expensively than traditional registered offerings with their lengthy registration process. The 144a Market traditionally has been used to raise capital for public companies via convertible or debt placements. SMH Capital believes the growth in the 144a market will continue as issuers and investors continue to gain awareness and familiarity with the benefits of the 144a market
  Contact
Andrew M. Miller
Vice President
Equity Capital Markets
SMH Capital Investment Banking
New York, New York
212-893-1124
Andrew.Miller@smhcapital.com