The PIPE market in general has been hot lately with 2008 values being double what they were in ’07 ($177.3 billion raised through 1,283 transactions, versus $84 billion raised via 1,416 transactions in 2007), and PwC is predicting that 2009 will see even greater increases. It stands to reason that venture capitalists would get in the game as well, considering that valuations are advantageous, and most of these publicly traded firms got to where they are, i.e. the IPO, thanks to having VCs on board. Probably not the best news for start-ups looking for money, but interesting to see how it plays out.
Many thanks to HEC alum Bernard Tézé (H. 85) of DS Avocats for sending over this excellent presentation that he put together concerning PIPEs in France. I saw Bernard this past Friday at a school event and we discussed the fact that there’s been little research performed recently concerning French PIPEs (perhaps this could make for an excellent research topic for one of our academics?).
PIPE (Private Investment in Public Entities) deals are up 100% in France thus far in 2008, more than twice the number (five) as last year. PIPEs represent a good way for firms to invest money in down markets as they they allow firms a flexible method for a healthy and quick return thanks to pricing discounts, short term liquidity options and creative structuring. The smaller size of PIPEs allows companies to sell only enough shares to raise what cash they need and are comparable to small public offerings that are confidentially marketed to a limited number of institutional investors.
French PIPE deals this year include Colony and Eurazeo raising their stakes in hotel operator Accor to around 30% and AXA Private Equity’s 11.43% stake in electrical components company Carbone Lorraine. Look for more PIPE deals from Mid-cap French private equity firms to continue at a high clip for the next year.