Actionable Ideas for Companies and Sponsors
At-The-Market Equity Offerings as a Capital Raising Alternative in Volatile Markets
Historically, ATMs have been used almost exclusively by large liquid REITs or small-cap issuers. However, they increasingly are being used by a broader range of companies for various financing needs, and are a particular useful execution format for issuers during periods of heightened market volatility and if there is uncertainty around the execution of a larger traditional follow-on offering.
In the first half of 2016, there were 95 ATM offerings announced for $16.0 billion, and we expect ATM issuance to accelerate given the decline in traditional equity follow-on activity and larger file-to-offer discounts in recent months. ATM programs offer many advantages including:
The ability to sell equity only at desirable prices and times, giving the Company complete discretion over execution of any sales
Mitigating the file-to-offer discount associated with a traditional public equity offering
The ability to capitalize on periods of increased volatility, such as company news events or index inclusion announcements
Uncovering significant reverse inquiry, as investors often reach out to the manager of the ATM directly to inquire about buying stock, and the issuer can sell a large block of stock directly at any time under its ATM