The first quarter of 2023 was a rebuilding period, boding well for the core growth financing PIPE market, even as large-scale SPAC-related PIPEs have exited stage left. The quarter represented improvement over the comparable quarter last year and over the final quarter of 2022. Partner Michael Adelstein is quoted in The Deal discussing the market for PIPEs in Q1 2023.

“With the decline in the stock market, PIPE offerings have slowed somewhat as a considerable number of issuers see their stock as undervalued and investors are waiting to see how the year progresses,” Kelley Drye & Warren LLP partner Michael Adelstein said. “As a result, there is a considerable amount of investor capital waiting on the sidelines either for the market to turn or for issuers to accept their new reality. Investors may wait longer to take positions as they focus on longer term investing scenarios,” Adelstein said.

Kelley Drye’s Adelstein suggested that issuers do well to have an investing plan predicated on investing before they need funds. “Investors sense desperation. An issuer will often get better terms (even in a down market) than they would when faced with an imminent need for a cash infusion. It is better to create the impression of raising money to grow a business rather than raising money to avoid insolvency,” Adelstein said.

The Deal Quotes Michael Adelstein