About us
Alternative Finance Solutions
“Markets can remain irrational longer than you can
remain solvent”
John Maynard Keynes
Smaller, publicly-listed life sciences companies have recently had to cope with increasingly limited access to finance: Equity financing is scarce as market sentiment has shied away from the riskier investment profiles and term debt is also infeasible as a result of limited credit support and tighter lending markets. Nonetheless, structured private deals allow companies to raise finance when traditional sources of debt/equity finance are unavailable. Elixir has relationships with specialist; private equity and crossover funds managing between £50m and £1,500m. These institutions invest in both public and private companies across a wide range of securities and structures. Securities which are available to companies may include privately-negotiated equity placements, term debt, fixed premium converts, variable priced converts and equity lines of credit.
Secondaries (PIPES)
As well as conventional public and private raises, Elixir can raise private money for public companies; a reflection of the growing dependence on venture capital to support late-stage product development, both within public and private companies. Privately-placed, structured transactions are already the dominant funding mechanism for small cap companies in the US, reflecting the benefits to timing, certainty and cost of capital.
The merits of such mechanisms are increasingly appreciated in Europe, particularly in life sciences. Privately placed deals often allow companies and investors to limit risks and minimize volatility, in a way which is accretive to the strategic planning exercise.
Equity Line of Credit
Equity lines of credit are a flexible means of raising equity capital for liquid issues which are trading into strength. THese structured deals comprise a commitment by an investor to purchase a maximum predetermined amount of shares of a public company's common stock in small tranches spread over a period of time - effectively a series of put options. Equity lines of credit have several key advantages:
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Equity line of credit is cheap to implement and equity is issued at a relatively small discount affording ELCs a low cost of capital.
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The company has full control over the timing and the price at which new, money is drawn down. Companies can therefore issue equity into stronger trading markets and hold back when they are weaker.
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An equity line of credit can be implemented quickly even in difficult market conditions and without a marketing exercise.
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While the company is not committed to draw down against the commitment, the investor remains committed for the entire period.
Convertible Debt
At a time when investors are concerned about the risks associated with life sciences investing, privately-negotiated convertible notes offer to bridge the divide. Convertible debt comprises a loan-note, which provides the holder with some hope of a return should things go wrong, and an option to convert into equity should everything turn out alright. These structures are an extension of the PIPE market and carry the same benefits in terms of timing, certainty and cost of capital. There are very many different deal structures and the term/profile of payments, conversion price (fixed premium converts, variable priced converts) and division of interest between cash and equity, all provide significant opportunity to tailor deal structures to suit the various life sciences business models.
If you would like to talk to Elixir about a specific project, please click on the button below. The most appropriate person will then contact you directly, to discuss your specific needs.
