SEC study: Private offerings surpassed debt offerings in 2010
SEC study: Private offerings surpassed debt offerings in 2010
Companies are increasingly taking advantage of securities rules that lets them raise
capital without having to go through costly registrations, according to a new study by
U.S. regulators, Reuters reported.
The Securities and Exchange Commission (SEC) study found that these private
offerings surpassed debt offerings in 2010 and continued to do so through the first
quarter of this year. The study also found that the spike in private offerings came as
public issuances fell by 11 percent from 2009 to 2010.
“To me, it is similar to other types of financial innovations,” SEC Chief Economist Craig Lewis told Reuters on the sidelines of the SEC’s first-ever small business advisory committee meeting. “Once people understand this is another path for obtaining equity capital, firms will consider it as another choice to make at the time they need capital.”
The study by SEC economists looked at various exemptions available for private
offerings, including the most popular one known as Regulation D’s rule 506. That rule allows companies to raise an unlimited amount of capital through unregistered offerings as long as the offerings only go to certain sophisticated investors.
Overall, it found that there has been a shift from public to private capital, with private
issuances increasing 42 percent to $1.4 billion from 2009 to 2010.
Companies are increasingly taking advantage of securities rules that lets them raise capital without having to go through costly registrations, according to a new study by U.S. regulators, Reuters reported.
The Securities and Exchange Commission (SEC) study found that these private
offerings surpassed debt offerings in 2010 and continued to do so through the first quarter of this year. The study also found that the spike in private offerings came as public issuances fell by 11 percent from 2009 to 2010.
“To me, it is similar to other types of financial innovations,” SEC Chief Economist Craig Lewis told Reuters on the sidelines of the SEC’s first-ever small business advisory committee meeting. “Once people understand this is another path for obtaining equity capital, firms will consider it as another choice to make at the time they need capital.”
The study by SEC economists looked at various exemptions available for private
offerings, including the most popular one known as Regulation D’s rule 506. That rule allows companies to raise an unlimited amount of capital through unregistered offerings as long as the offerings only go to certain sophisticated investors.
Overall, it found that there has been a shift from public to private capital, with private issuances increasing 42 percent to $1.4 billion from 2009 to 2010.
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