LSE has launched a private placement funding platform connecting unlisted growth companies with institutional investors
Luca Peyrano, chief executive officer of Elite, told Financial News the new platform could be the “single most important move” since the programme was launched in 2012.
Elite Club Deal will begin with pilot phase testing, the LSE said in a July 11 statement, involving five European companies in the Elite programme. Assuming regulatory approval is granted by the UK’s Financial Conduct Authority, a full launch is planned for late 2016.
The private placement platform represents an opportunity for the 400-plus growth companies that take part in Elite to raise capital, in the form of either equity or debt, from a variety of investors including institutions as well as private equity and venture capital firms. Elite Club Deal will invite banks and brokers to the platform to help connect investors with companies.
The latest initiative complements two existing components – the LinkedIn-style corporate access platform Elite Connect and the business support programme Elite Growth.
Part of the rationale for Elite Club Deal is to derisk initial public offerings, Peyrano said, by helping companies raise capital before they are publicly listed, with the aim of making them more aware of the importance of establishing relations with investors.
Peyrano described Elite Club Deal as a “one-stop shop” for companies, “giving them access to a host of institutions in a secure environment, ultimately allowing them to finance their growth and in turn drive job creation and innovation across Europe and beyond”.
Among the investor community, Elite has attracted “significant interest” from private banks, according to Peyrano, while family offices and angel investors have also shown an appetite to participate.
“There are significant pools of liquidity that have an appetite to diversify with respect to the present options available,” he said. adding that high-quality private businesses are something of a new asset class for some investors.
Peyrano said Elite Club Deal will offer a “streamlined” process, particularly given its online nature.
He said: “Private placements are obviously today performed offline in a case-by-case situation where counterparts meet almost by accident.”
The LSE wants to transfer its expertise in the public market to make “more efficient” the private space, he said.
Company documentation made available through Elite Club Deal will be standardised, with banks, financial advisers, lawyers and auditors helping companies to prepare and upload the required documents to the platform. Not everything will be standardised. “You want always to leave sufficient flexibility,” Peyrano said, giving the example of pricing.
When a company is ready, with its documentation in place, an introduction will be made to an “anchor” investor, or cornerstone backer. If negotiations between the company and the investor yield an agreement, the deal may then be opened to follow-on investors on the same terms and conditions.
“This will make the whole process lean,” Peyrano said. “We are talking about private companies. They aren’t experts in this space, but they will find on this platform a clear mechanism.”
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