Investment Funding in the New Decade
The main difference between a variable pricing offer, often referred to as an “equity line” or “special purpose placement (” SPP “), and a traditional raise, often referred to as” fixed pricing, “is that a With absolute certainty SPP offers you the money you need.
Here are the procedures to get an SPP opportunity with standard, procedures, logistics, and costs:
1. Pre-Qualification Template and Micro Summary:
This is a standard pro forma process that typically assesses financial performance and some basic financial parameters. Data on the shareholding structure and the key figures for stock trading are also evaluated.
2. Review by the fund manager:
One or more members of the Investment Committee discuss with you in detail your capital requirements and your business plan.
3. Design of a term sheet:
Documents describing the funding arrangements:
iii. Use of the proceeds
iv. Draw mechanisms, including;
on. notice periods
b. price periods
e. Discount rate to VWAP
f. Percent multiple on draw down
4. Draft a Termsheet initialed by your company.
5. Final documentation including the subscription agreement issued by the Fund:
The final documentation extends the term sheet design and contains more detailed and supplementary terms, including, but not limited to:
iv. Contracts, agreements and remedies
v. At this stage, it is also common to arrange a scrip loan to facilitate the liquidity and protection of the market.
6. Fees and expenses:
With variable pricing no prepayments are required. Normal trading fees and expenses will only be calculated after you have received a formal, legally binding commitment from the Fund to provide the agreed funding.
At this time, your company must pay legal fees of approximately $ 15,000 directly to the attorneys for the fund to create the documents associated with the provision of your facility.
Other fees that are due are
I. Success fee of 1% in cash and 5% in stock of the entire facility.
ii. Commitment fee equal to 1.5% of the total facility paid to the Fund at the time of first use or 12 months after signing of the Agreement in cash or in shares, whichever is earlier.
iii. Drawdown management fee of 5% of each drawdown deducted from the early withdrawal to manage the drawdown process.
The costs associated with this type of installation are significantly less than those associated with a conventional dilution arrangement. As a rule, there is an advance and legal and due diligence with no guarantee of success, followed by a 6% performance fee for a 20% discount on the market.
In addition, there is no certainty that you will receive the money in a conventional increase. With your SPP you will surely get the cash you need.
Significantly, your SPP facility has built-in protection against abuse of market prices for the related new issue of shares. Funny business can occur with a conventional boost.
This “death spiral” can occur when market forces consider that there is no downside protection in either an alternative drawdown or a potential placement.
Potential placements and even other traders may therefore sell stocks before the drawdown price or the placement price and forget about your stock price.
Your SPP facility has unique capabilities that set a company floor to ensure that such aggressive practices can not be applied if your SPP facility is in place.
Additional services such as investment banking functions, roadshows for institutions, organization of analysts for your stock, PR or other functions are available in various investment banking departments.
Institutional Investor Partner Substantial fund, bestselling author, hedge fund industry pioneer, multi-billion dollar transaction completed, adviser to Fortune 500 companies, faculty member of most of the world’s largest management institutions, raised funds worth more than 1.5 Billion USD.