Private placements

Peregrine Capital has contacts with many Russian and foreign funds and management companies who are investing in equity of businesses from almost all industry groups.

There comes a point when most growing companies require funding beyond the level that their own current operating cash flow can provide.

The typical growth indicators that call for additional investments are production expansion and growing sales, geographical expansion, acquisition of smaller competitors, maintaining competitive growth, and introducing new products or services to the market.

Despite the many sources of funding available on the market, each of them has its limitations and imposes additional requirements to the parameters of the financed business.

For example, commercial bank loans are often available for companies that demonstrate stable and long-term historical profitability of their operating activities. While a public offering of stock or bonds is a costly procedure and imposes quite a lot of restrictions on a company (a significant amount of disclosure, maintaining high liquidity of the issued instruments, the risk of hostile acquisition of large volumes of stock or bonds with the subsequent risk of losing control, etc.).

In this regard, private placement to third-party investors appears to be a promising form of financing a growing businesses.

Private placement is direct sale of a new issue of stock to institutional investors, such as private equity funds, banks and other qualified financial investors.

Less frequently, private placement is offered to strategic investors, since, as a rule, they have little interest in funding the development of an existing or potential competitor and only participate in such deals if there is a pre-determined mechanism for gaining control of the business over a limited period of time.

This form of financing allows to:

  • Obtain financing without increasing the debt burden, which can be a very important factor during the intensive development of a business
  • Choose an investor after carefully thought-through selection to make sure that it is best suited for existing owners of the company in terms of business philosophy and attitude
  • Save time and costs related to the deal
  • Get benefits from introducing rules of corporate governance, as any investor acquiring minority interest requires absolute transparency about ways in which business is conducted and strict control after them which facilitates raising financing in future
  • Enhances the company's access to new markets, provides additional competitive advantages and facilitates additional financing in the future

Successful private placement requires a detailed Business Plan for your company's development and Information Memorandum, which will best show the essence of your business and its attractiveness to investors.

The key to success is to use experienced financial, tax and legal advisers, who are well familiar with every phase of private placement process and can prepare the client's business for this process in a short period of time, select optimal investors, prepare necessary documentation, and close the deal. Depending on the readiness of your company's development plans, the entire process of private placement takes from three to nine months.

In addition to its highly professional staff who have implemented a number of complex transactions in recent years, Peregrine Capital possesses wide contacts among Russian and Western institutional investors as well as Russian business circles. This combination allows us to execute the entire scope of work for a private placement — from valuation of the client's business and preparation of Private Placement Memorandum to marketing the project among investors and advising on structuring and closing the deal.