Bryan Garnier & Co successfully syndicates a EUR 7 million P.I.P.E. for CAST, the leading Application Mining software company
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London – April, 2002 – Bryan, Garnier & Co (www.bryangarnier.com), a pan-European, independent investment bank focusing on European growth companies, announced today that it has led the placement of a EUR 7 million PIPE (Private Investment in Public Equity) financing for CAST (www.castsoftware.com), a leading listed software company committed to simplifying the complexity of software engineering through the use of Application Mining tools.
The company issued 1.750.000 convertible bonds at a conversion price of 4 euros, a 43% premium to the average stock price over the past 6 months; the issuer benefits from a call option on a maximum 40% of the bonds, depending on its 2003 EBIT performance. The issue was fully subscribed to by Viventures, a top international venture capital firm based in Paris, San Francisco and Singapore . The offering was approved by the French stock market watchdog on April 16th, 2002, and by the shareholders at their April 20th 2002 EGM.
CAST has succeeded in building a pioneering position in the Application Mining market. Created in 1990, the company grew independently and went public on the Paris Nouveau Marche (Euro NM “7289”) in May 1999. The Company has built an international installed base of over 1800 blue chip companies and opened offices in nine countries. Commenting on the announcement, Gregoire Revenu, a Bryan, Garnier & Co Managing Director in Corporate Finance, said: “After 12 years of self-funded growth, the company and its management were looking for the support of a sparring partner who could help to make the right strategic decisions in a changing environment and strengthen CAST’s leading market position. This financing round provides the Company with not only the financial resources to overcome the general economic slowdown that is affecting the software industry, but also the experience and support offered by a leading international venture partner”.
This venture capital investment in a public company is one of only a few successful P.I.P.E.s on the EuroNM stock market. P.I.P.E. transactions recently captured the attention of the financial community in Europe and the US due to the drastic downturn in the capital markets that took away the attention of public investors from successful technology companies with limited market capitalization and liquidity. Despite significant press coverage, there have been few successful PIPE transactions. The reasons are simple : The Venture Capital investment methodology (depth of due diligence, negotiation process, preference rights, active participation in setting strategy) doesn’t offer an obvious fit with stock markets constraints. Furthermore, capital market regulations, which are designed to regulate the usual case of public investors investing in public equity, can become a major hurdle when a public company has to raise financing and cannot be funded by public investors. Finally, Venture Capitalists do not necessarily have the management mandate from their limited partners to invest in public equity, nor the adequate resources to deal with the financial sophistication of these transactions.
For these main reasons, the risks associated with the execution of such deals are very high, not only at the negotiation level but also at the structuring and regulatory approval stages. The benefits are nevertheless obvious, not only because it creates a financing alternative when the capital markets become inefficient, but also because venture capitalists can bring to companies that went public at an early stage of their development the adequate experience and support to better overcome the current market environment.
The success of such transactions rely, in addition to the inherent qualities of the company itself, on the ability of the investment banker to combine a deep understanding of the venture capital industry with strong capital market expertise.
This placement illustrates Bryan, Garnier & Co’s unique positioning and ability to innovate and structure complex fund raisings. Bryan, Garnier & Co has succeeded in developing this know-how through a team that blends experienced investment bankers, former venture capitalists and successful entrepreneurs.
About CAST
Founded in 1990 CAST is an outstanding European software company considered by the major IT analyst houses including Gartner, Giga Group and IDC, to be the pioneer and acknowledged leader in the Application Mining market. The Company is entirely committed to simplifying the complexity of software engineering through Application Mining solutions ; its software suite facilitates the understanding of the internal structure of applications.
Headquartered in Paris, CAST currently employs 230 people across nine major European cities, with four offices in the USA. Over 1,800 blue chip companies have adopted the CAST Application Mining Suite, while the Company has built software partnership with leading players including Microsoft, Oracle and Rational Software. CAST Software has been listed on the Paris Bourse Nouveau Marche (Euro NM “7289”) since May 1999.