Cash being funneled into private investment in public equity deals —or PIPEs — continues to accumulate at a record-breaking pace. The amount of money raised in the PIPEs market during the first half of this year was the largest ever, according to a new report from Sagient Research Systems, which keeps score.
During the first six months, the research firm counted 645 PIPE transactions totaling $22.42 billion in equity and equity-linked capital raised (excluding structured equity lines and Canadian issuers). Although the number of transactions declined slightly compared with the first half of last year, the amount raised represented a 38 percent increase over the total amount raised during the first half of 2006.
The deal flow in the first half of 2007 also puts the market on track to easily exceed last year’s record volume of PIPE activity. In 2006, there were 1,326 PIPE transactions totaling $28.14 billion in equity and equity-linked capital raised, according to Sapient. This set all-time single year record highs in both the number of transactions and the total dollar value invested.
PIPEs, used primarily by small companies in need of cash, involve a private-placement transaction in which investors buy securities directly from a publicly traded company, usually at a discount from the market price of the common stock. Hedge funds have been big investors in PIPEs.
Rodman & Renshaw ranked as the most active investment bank, based on the number of transactions. In the first half of this year, it was the placement agent for 30 transactions worth a total of $544 million. UBS Investment Bank, which was the placement agent for eight transactions worth more than $2.6 billion, topped all banks when measured by total value of the deals.
Iroquois Capital was the most active institutional investor in the PIPEs market during the first half of 2007, according to Sapient. It plunked down $26.5 million in 38 transactions. Hedge fund Highbridge International committed the most amount of money in the first half, investing $421 million in 24 transactions.
The top legal counsel in PIPE deals during the first half of 2007 was Sichenzia Ross Friedman, Ference, with 20 transactions. Vinson & Elkins was tops when ranked by total value of transactions ($3.2 billion).