Nov 302012

Dark pools of liquidity (dark pools) play a vital function in the equity marketplace and using them has become standard operating procedure, especially when executing large trades.  Unlike  traditional exchanges, dark pools provide market participants with trading venues where quotes (price, size, and side of an order) are not displayed. This in turn allows market participants to execute transactions anonymously with minimal information leakage, which makes dark pools a useful source of liquidity for raising equity capital.  In an at-the-market offering (ATM), traders must carefully balance the benefits of raising additional capital for clients with the costs of impacting stock prices.  Small cap stocks in particular can often have scarce amounts of liquidity available in traditional exchanges, which emphasizes the need to tap into additional sources of liquidity.  By strategically accessing these dark pools, capital can be generated with minimal price impact and information leakage.

Another key benefit for issuers raising capital with an ATM is that dark pools frequently provide price improvement.  When there is a match between a buyer and seller, the transaction typically occurs between the bid and the ask prices.  This feature can be especially useful for issuers whose stock has wider spreads, as these small price improvements in dark pools can accumulate significantly over time.

As dark pools continue to increase in market share and popularity, it is also important to understand the nuances of their business models.  With dark pools being owned by broker-dealers, consortiums, and exchanges, orders can be executed based on a variety of different frameworks, including being paired off with a disproportionate amount of high frequency trading volume.  Traders should be cognizant of these contrasting market structures and analyze executions with post-trade forensics as frequently as possible.  When monitored closely, dark pools are effective venues for raising capital through at-the-market offerings.

Oct 252012

On October 1, we kicked off the third quarter with the publication of two news articles featuring Todd Wyche, CEO of Brinson Patrick.

The first, published by Growth Capital Investor, provides insights into the recent surge of interest in ATM offerings. The published article, which can be viewed online here, describes the growth in use of this tool in the past few years and some of the advantages, such as cost savings, that companies find appealing.

In addition, we recently worked with Robert Hoffman, chief financial officer for Arena, to provide recommendations for CFOs as we approach the end of the year. This article, published in the October 1 issue of Genetic Engineering & Biotechnology News, describes the specific steps that can be taken to be well-prepared from a financial perspective.

Sep 102012

We’re not clairvoyant, but we’re also not surprised that life science ATM financing slowed in the second quarter. There was a tremendous increase in all forms of follow-on offerings, including ATMs, in the first quarter of 2012, that went hand-in-hand with the stock market’s overall strong performance.

A summer slowdown doesn’t predict a trend to us: despite the decrease in capital raised, life science ATM sign-ups hit a quarterly record, and 50 life sciences companies now have ATMs available to raise capital when needed.

The growth trend is still in place, and some first-hand conversations we’ve had at recent life sciences events have us convinced that these firms are starting to recognize the benefits that ATMs bring to their financial toolkits.

Jul 192012

Strategic CFOs in the life sciences industry are increasingly employing ATMs because they enable companies to better control the financing process and the relatively low cost compared to more traditional follow-on financing vehicles.

Med City: Common Misunderstandings of an Emerging Financing Vehicle: At-the-Market Offerings

Apr 242012

 U.S. companies raised approximately $8 billion through ATMs in 2011, compared to $8.3 billion in 2010. The equity capital raised was through the activity of 209 ATM offerings of common stock across 20 industries, compared to the activity of 187 ATM offerings in 2010. $1.6 Billion Raised in fourth quarter last year.

Brinson Patrick Reports $8 Billion Raised by U.S. Companies Through At-The-Market (ATM) Offerings in 2011