Intro to CPC's – Part III: Lots of Deals!
By David Feldman at 15 March, 2010, 6:17 am
Completing this introductory series on capital pool companies, or CPCs, in Canada, the technique has been quite successful indeed. The Reverse Merger Report has reported that 14 deals (known as qualifying transactions or QTs) have been completed just in the period of February 10 through March 11. It seems that energy and Chinese deals rule.
Remember that these are smaller transactions which raise very little money for earlier stage companies. Those that are completing financings seem to be raising between $2 and $5 million.
All that said, a number of deals do not make it. Just a month ago, the RMR noted that a number of CPCs were having challenges in raising money, and that others were facing regulatory issues. One quote suggested that CPC sponsors were having difficulty convincing investors to participate in financings. And with smaller deals sometimes comes simple mistakes. One company, for example, submitted its financial statements to the regulatory authorities, only to learn that they did not meet the standards for a Canadian public company. They then shelved their deal. Others are turning their CPCs into investment companies.
We’ll continue to monitor this fascinating emerging trend.
No comments yet.