Adrian JohnsonTLDR:
- The 2023 Technology and Life Sciences PIPE and RDO Report analyzes 177 private investments in public equity by U.S.-based technology and life sciences companies.
- Market challenges, including volatility, high interest rates, and geopolitical conflicts, continue to impact capital markets activity in the U.S.
The 2023 Technology and Life Sciences PIPE and RDO Report provides insights into the landscape of private investments in public equity (PIPEs) and registered direct offerings (RDOs) by U.S.-based technology and life sciences companies throughout 2023. The report highlights how market volatility, high interest rates, and geopolitical conflicts have influenced capital markets activity in the U.S., leading many companies to take a cautious approach.
During the third quarter of 2023, there was a slight uptick in IPOs by high-profile technology companies; however, this did not translate into increased overall transaction volume. Many companies are adopting a “wait-and-see” strategy amidst the uncertain market conditions. As a result, companies may increasingly turn to alternative financing options like PIPEs and RDOs to meet their capital needs.
PIPEs and RDOs offer advantages such as discreet negotiation and public announcement post-agreement, making them attractive during periods of market volatility. However, the higher cost of capital for PIPEs, due to lack of company leverage and securities illiquidity, remains a challenge. On the other hand, RDOs provide investors with freely tradable securities, leading to smaller discounts compared to PIPEs.
Key trends in the second half of 2023 include technology issuers raising less capital while life sciences companies are raising more, and the prevalence of full-ratchet conversion price adjustments. These trends illustrate the shifting dynamics within the technology and life sciences sectors in the context of the broader market challenges.
