Special Private Placements (SPP's)

Special Private Placements have been in use by public companies around the world for over a decade. Today, SPP's are a common form of financing for public companies of all sizes and for private companies pre-listing.

SPP's are a form of capital raising known as 'dribble out' financing or variable financing. The structure allows companies to raise capital used over time to complete objectives at much less cost (dilution) than alternative approaches i.e. via rights issues where typically the stock drops to the placement price.

Typical facilities range from $5-50m and will either be a Convertible Note or Equity Line Facility depending on thechoice of investor.

When should you use a Special Private Placement?

SPP's are used typically for the following objectives by listed companies:

  • Working capital/build cash reserves
  • Funding acquisitions
  • Funding capital investment and expansion
  • Retire debt/reduce balance sheet gearing/reduce borrowing costs
  • Enhances Company's credit and borrowing status 
  • Stand-by funding
  • Project finance
  • Negotiating with stakeholders
  • Supporting existing capital raising efforts eg. pre-IPO

Private Placement Facilities are also used by pre-IPO Companies to support a current capital raise or stock exchange listing by marketing to investors and using the facility to negotiate with stakeholders (banks, asset owners etc) prior to listing the company.

Special Private Placements – Features

  • Flexibility – The facility can be drawn down at any time typically over a 12 – 36 month time frame at the discretion of the company.
  • Control – The Company retains control over the amount and timing of each drawdown. The investor is a passive shareholder with no requirement for board representation.
  • Speed – Standard placement documents used.  Once the facility is established the draw down process is fast, allowing the company to take advantage of favourable share movements.
  • Certainty – Provides the company with funding certainty. The Investor is obligated to provide funding (in exchange for shares) for the term of the facility.  The Company is not committed to draw down on the facility unless previously agreed with the Investor.
  • Cost Effective – Competitive with traditional financing structures and designed to minimise dilution effects on shareholders.
  • Security – Unlike a credit or borrowing facility, there is usually no security requirement under this facility.
  • No Short Selling or Hedging from Investor – Investor covenants not to cause or engage in any direct or indirect short selling or hedging of the securities of the company.
  • Provides against solvency issues –The company has a legally binding contract with an investor that the company can draw down funds.

Type of Facilities

Two major types of facilities are generally available and these include Convertible Note Facilities and Equity Line Facilities.  We can work with you to determine the most appropriate facility for your circumstances.

Recent Private Placement Facility Approvals

If you are interested in a Special Private Placement facility or have any queries please contact us or fill out the Capital Raising Form.