In June 2017, the SEC’s Division of Corporation Finance (“Corp Fin”) announced a new policy effective July 2017 that essentially extends the confidential submission process to all issuers while keeping the EGC process unchanged.  The new policy also permits an issuer to submit for confidential review a registration statement filed to register a class of securities under the Exchange Act, such as a registration statement on Form 10 for a U.S. issuer or a Form 20-F for an FPI. An issuer must publicly file an Exchange Act registration statement at least 15 days prior to seeking its effectiveness. For certain large, privately held companies that have undertaken various rounds of private financings and may not have an immediate need to raise additional capital, a “direct listing” may be an attractive alternative to a traditional IPO.

Historically, there have not been many issuers that have undertaken a “Form 10 IPO” or “backdoor IPO,” but market dynamics have changed. However, for a unicorn, which has been able to raise capital in the private markets at attractive valuations, a direct listing may be a good alternative. A listing on a national securities exchange will provide much-needed liquidity for employees, early investors, and even venture capital and private equity sponsors. A unicorn, advised by financial intermediaries acting as financial advisers (not underwriters), likely will be able to attract the attention of additional or new institutional investors that might purchase its securities in the secondary market. These same financial intermediaries, or others familiar with the company, might provide research coverage following the listing of its stock on a securities exchange.

To learn more about direct listings, listen to our ThinkingCapMarkets podcast.

We recently updated our FAQs to reflect changes brought about by the SEC’s new policy extending the ability to submit IPO (and certain follow-on) registration statements beyond emerging growth companies. You may access our FAQs on IPOs and our FAQs on Foreign Private Issuers (which address a number of issues beyond IPOs, such as the definition of “foreign private issuer,” the SEC Staff guidance relating to certain prongs of the FPI definition, testing FPI status, and related matters), here:

Frequently Asked Questions about Initial Public Offerings

Frequently Asked Questions about Foreign Private Issuers

Morrison & Foerster’s Anna Pinedo discusses IPOs for U.S. and non-U.S. domiciled companies in this ThinkingCapMarkets podcast.

 

 

Issuers often wonder whether confidential treatment can be sought and obtained with respect to commercially sensitive information that may be contained in their commercial agreements. In our recently updated Frequently Asked Questions about Confidential Treatment Requests, we review the process for submitting such a request, as well as reasonable expectations regarding the information that may receive the benefit of confidential treatment.

Morrison & Foerster’s Anna Pinedo discusses the basics of confidential treatment requests in this ThinkingCapMarkets podcast.

PIPE transactions, or private investments in public equity, remain an important financing alternative. During the third quarter of 2017, PIPE transactions raised approximately $19 million. Volume in PIPE transactions appears to be on track for another approximately $50 million year. While more issuers may now be eligible to avail themselves of a shelf registration statement and may favor shelf takedowns for follow-on offerings, PIPE transactions may offer a solution especially in special situations. For example, for companies, such as energy companies, seeking to undertake a financing as part of a recapitalization, a PIPE transaction may prove the best alternative. Morrison & Foerster’s Anna Pinedo discusses the basics of PIPE transactions in this ThinkingCapMarkets podcast.

Read more about PIPE transactions in our popular FAQs, which can be accessed here: Frequently Asked Questions about PIPEs.

 

For an issuer that has an effective shelf registration statement and is contemplating a follow-on offering, or an issuer that has a resale registration statement that is effective and selling stockholders eager to sell, a registered direct offering remains an important financing alternative.  The marketing of a registered direct offering is targeted, much like the process undertaken in connection with a PIPE transaction, but given that the securities sold in a registered direct offering are freely transferable, it has certain advantages when compared to PIPE transactions.  In recent months, a number of energy companies that have undertaken follow-on offerings have structured these as registered direct offerings.  Usually, there are a limited number of institutional investors that participate in the offering.  Of course, there is no limit on the type of investor that may participate.  Morrison & Foerster’s Anna Pinedo discusses the basics of registered direct offerings in this ThinkingCapMarkets podcast.

Our recently updated FAQs can be accessed here: Frequently Asked Questions about Registered Direct Offerings.

Since ATMs were first undertaken in the mid-1990s, there has been tremendous growth in adoption of this financing alternative.  Approximately 210 ATM offering programs were filed last year, and this year promises to exceed that.  Energy companies, utilities, and REITs remain among the most active users of ATM programs.  However, in recent years, there has been increased use of ATMs by life sciences companies.  Morrison & Foerster’s Anna Pinedo gives the basics of ATMs, as well as some of the legal and regulatory considerations, in this ThinkingCapMarkets podcast.

Our recently updated FAQs can be accessed here: Frequently Asked Questions about At-the-Market Offerings.