Capiche Capital streamlines private placement process
This article was originally written by Ellsworth Dickson and published in the April-May 2018 Edition (Vol 16 Issue 3) of Resource World Magazine (resourceworld.com). It is reprinted by Capiche with permission.
Participating in a private placement can be a frustrating experience for an investor — but also a lucrative one. It’s frustrating for not just small retail investors but all investors. In fact, to date, small retail shareholders have generally not participated in private placements.
Those invited to participate in such financings, and who are eligible, can purchase shares at a discount to the market price and often with a half or full warrant “sweetener” attached. Exercising “in-the-money” warrants before expiry allows investors even greater potential upside.
The paperwork and filings required to complete a compliant private placement are extensive and complex, especially for an issuer.
That’s where Capiche Capital Technologies Corporation comes in. Founded by securities lawyer, James Atherton, CEO, and Jonathan Longe, Chief Technology Officer, Capiche operates a cloud-based platform that brings the private placement process online. Capiche’s web-based platform simplifies the private placement process and reduces the time and cost required to complete that process so that a greater portion of proceeds are available for furthering corporate objectives and creating shareholder value. The platform is continually updated to ensure compliance with securities laws and stock exchange policies.
Atherton told Resource World that the manual, paper-based method of recycling the last deal’s paper for the next private placement no longer makes sense and that during the lengthy downturn in the mining sector, he and partner Longe developed the solution. Those in the mining sector may recognize Jonathan Longe’s name; he is the founder of Corebox, a web-based platform for mining companies to graphically illustrate drill results.
The Capiche platform guides users through the private placement process and automatically generates required documentation, thus allowing investors to complete their subscriptions online in just a few minutes and companies to track incoming subscriptions in real time. As the process is automated and online, companies can take subscriptions for smaller dollar amounts from a greater number of investors, thereby gaining access to a significant untapped pool of investors.
Up until now, participation in most private placements has been limited to institutional investors, high-net worth individuals and those closely connected to the company. Canadian securities laws now permit exchange-listed companies conducting private placements to offer existing shareholders the opportunity to participate.
The Existing Security Holder Exemption is an exemption from the prospectus requirement and is available in all Canadian jurisdictions. It permits a distribution of a security by an issuer to a person who confirms in writing that, prior to the date the offering was announced, they held the type of listed security being subscribed for and, unless the investor has obtained suitability advice from a registered investment dealer, the investor invests a maximum of CDN $15,000 per issuer under the exemption in a 12-month period. The Accredited Investor Exemption does not have any such limit.
Currently, Capiche is focused on private placements by companies listed on the TSX Venture Exchange, including the NEX Board, in the mining sector but the platform will soon be expanded to accommodate companies listed on other exchanges in other sectors.
For interested companies, a demonstration can be arranged at capiche.io