PIPE Market Raises Over $16 Billion Dollars in Third Quarter

Preliminary league table data before the quarter ended indicated that private-investment-in-public-equity offerings raised more than $16 billion dollars in the recent quarter.

More recent data indicated that PIPE deals would be heading for $19 billion by the actual end of the quarter.

PIPEs raised $17.46 billion in the previous quarter and $21 billion in the same period last year.

While volatility remains low, political uncertainty restrained the market somewhat.

Biotech and technology offerings made up most of the deal flow, but some of the biggest PIPE deals came from the energy industry.

Oneok Inc. (OKE) established a $1 billion at-the-market offering, and Genesis Energy LP (GEL) raised $750 million in a convertible preferred stock offering. Phillips 66 Partners LP (PSXP) also raised $750 million in a convertible preferred offering and $300 million in a common stock offering.

The maritime shipping industry was no slacker either, with Teekay Offshore Partners LP (TOO) raising $640 million. Maritime shipping generates large PIPE transactions, including prodigious equity lines, with little transparency as to investors and potential changes in control from the investments.

Most of the larger maritime shipping businesses are based offshore and are closely held by wealthy investors who disclose as little of their doings as possible.

Many of the transactions were ATMs, which do not necessarily raise capital immediately. In fact, they may never raise funds, but they provide companies with a convenient backstop and generate fees for the banks and attorneys that structure the arrangements.

League table data is based on data from PrivateRaise, TheStreet Inc.'s private placement data service. PrivateRaise compiles data on private placements of $1 million or more by U.S. companies.

The data includes traditional unregistered PIPEs, registered direct offerings, ATMs, confidentially marketed public offerings and equity lines.

PrivateRaise also tracks Rule 144A offerings, but that data is not included in our quarterly league tables.

The healthcare industry generated the largest number of deals, over 130.

While those healthcare PIPEs raised over $4 billion, about two dozen energy deals raised over $4.2 billion.

Destruction from hurricanes has caused massive infrastructure damage in the energy sector and will likely push extensive energy investing in the upcoming quarters.

While the media has focused on weather-related damage in the southeast, the energy industry also faces potential earthquake damage in the Midwest.

Much of the industry's connective infrastructure is concentrated in large tanks and pipelines with a nexus in Cushing, Okla. Earthquakes, which were once uncommon in the area, now occur frequently as a result of fracking. A major earthquake there could destabilize the oil and gas industry as well as U.S. and global economies.

Technology is often responsible for a significant proportion of PIPE deals, but in the recent quarter it only made up about 30 deals that raised about $400 million. Typically the sector supports a few offerings ranging from a few hundred million dollars to over $1 billion.

This quarter saw mostly smaller technology offerings and no billion dollar deals.

Real estate accounted for over $4 billion in deals, but most of these were ATMs that did not result in an immediate cash outlay.

Common stock deals dominated the market as usual, raising over $4.7 billion.

Preferred stock offerings were also popular, raising in excess of $2 billion, and convertible debt PIPEs raised over $650 million.

Terms on convertible debt continue to be stringent and may call for interest of 20% or more.

ATMs accounted for about half of the overall deal flow in terms of dollars.

In terms of market cap, over a 100 deals came from companies with a market cap less than $50 million. A dozen originated from companies with a market cap of $5 billion or more.

The most prominent market player was placement agent H.C. Wainwright & Co., which placed deals in the double digits, raising over $70 million.

Wells Fargo Securities LLC placed a smaller number of offerings that raised over $600 million.

Sabby Management LLC invested in the largest number of deals, followed closely by Perceptive Advisors LLC.


This article was produced by the staff of The Deal, a financial intelligence service that provides actionable information on deals and dealmakers, offering over 100,000 users the unique opportunity to find potential deals and target dealmakers.