Actionable Ideas for Companies and Sponsors

Concurrent Offerings Gaining Momentum

Concurrent equity and convertible issuance has accelerated, with year-to-date volume nearly eclipsing full-year 2018 levels. In the U.S., nine transactions have priced raising $15 billion, and in Europe, three deals have priced raising $2 billion. Concurrent equity and convertible offerings allow companies to maximize proceeds by tapping two distinct investor bases and the average concurrent offering size has been $1.4 billion since 2018, representing 25% of market cap. Specific situations where concurrent offerings are applicable include (i) M&A transactions where significant equity is required to maintain ratings or leverage, (ii) the need for both liquidity for existing shareholders (through the equity component) as well as primary capital (through the convertible component), and (iii) issuers with sizable capital or deleveraging needs but dilution sensitivity.

The concurrent structure is also relevant in the IPO context, where an issuer needs to raise a larger amount of equity than is efficiently achievable in the IPO. Companies have used this structure to maximize debt paydown by selling a mandatory convertible, which alongside the IPO achieves 100% equity credit from the ratings agencies. Jefferies recently served as an active bookrunner for Avantor on its concurrent $3.3 billion IPO and $1 billion mandatory convertible.