Fasken is pleased to release its 2020 annual Canadian PIPE (Private Investment in Public Equity) Deal Point Study (PDF).
Our second annual Canadian PIPE Deal Point Study offers market insights from a review of the 2020 Canadian PIPE deals having a deal size of greater than $10 million and whose deal details are publicly available. We reviewed these deals for (i) basic characteristics of the target, the investor(s) and the deal (including market capitalization of the target, industry and transaction amount); (ii) attributes of the acquired securities; and (iii) the investor and issuer rights granted pursuant to the deal.
This edition focuses on PIPE transactions completed in the 2020 calendar year in Canada, compares the results seen in our 2019 Canadian PIPE Deal Point Study, and looks ahead to 2021.
The 2020 Deal Point Study yielded notable trends, including:
- The majority of the deals, approximately 53%, involved common equity.
- The most prevalent rights negotiated were registration rights (approximately 47% of deals surveyed); anti-dilution, information and voting rights were also common (each in approximately 40% of deals surveyed).
- The least common rights granted were redemption rights at the option of the investor, which were only included in approximately 7% of deals surveyed.
- In comparison to the 2019 study, deals in the 2020 study included less shareholder rights across the board, with the exception of voting rights.
- The average market capitalization of target companies in the 2020 deal study was approximately 250% larger than the 2019 study, and the average transaction size was approximately 21% larger.
If you are interested in transactional trends in Canada, we recommend reading our inaugural Canadian PIPE Guide and 2019 Deal Point Study. We also suggest reading our Canadian Proxy Contest Study - 2020 Update which offers a review of the country's proxy contest activity over the past year and follows on from our ground-breaking 2013 Canadian Proxy Contest Study and our annual updates, our 2015 Canadian Hostile Take-Over Bid Study that provided an empirical analysis of all 143 hostile bids for control of a Canadian-listed issuer over the ten-year period ending in 2014, as well as our analysis of hostile bid activity since the 2016 changes to the bid regime.
Our Directors' Handbook: Shareholder Activism provides practical guidance for public company directors and boards looking to bolster their defence against activists.