Capital Raising Through Regulation D Vladimir Ivanov* Senior - PowerPoint PPT Presentation

Capital Raising Through Regulation D Vladimir Ivanov* Senior Financial Economist U.S. Securities and Exchange Commission *The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publication or statement of any of its employees. The views expressed herein are those of the author and do not necessarily reflect the views of the Commission or of the author’s colleagues upon the staff of the Commission.

Public vs. Private Capital Raising 1,500 1,250 1,000 750 Amount Raised ($ billion) 500 250 0 Registered debt Registered equity Reg D Rule 144A Other private* 2009 2010 2011 2012 2013 2014 * Other private include Reg S and other Section 4(2) offerings Sources: EDGAR Form D and Form D/A filings for Rule 504, 505, and 506 offerings; Thomson Financial for all others

Issuers in the Reg D Market Hedge Funds $388 Total Other Investment Funds $426 capital Private Equity Funds $316 raised ($ Non-Financial Issuers (Operating) $133 billions), Financial Services $17 2009-2014 Real Estate $21 Venture Capital Funds $30 $0 $500 $1,000 $1,500 $2,000 $2,500 2009-2013 2014 Non-Financial Issuers (Operating) 12,389 Number of new Hedge Funds 1,848 issuances, Real Estate 2,789 2009-2014 Financial Services 1,145 Other Investment Funds 1,603 Private Equity Funds 1,550 Venture Capital Funds 680 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 2009-2013 2014 Source: EDGAR Form D filings and Form D/A (amended) filings

Rule 506(b) vs. Rule 506(c) September 23, 2013 - December 31, 2014 Number of Total amount Mean amount Median amount Form D Amendment sold sold sold ($ Exemption Filings Filings ($ billions) ($ millions) millions) 506(c) 2,117 822 $33 $13 $0.7 506(b) 24,500 17,370 $1,520 $26 $1.6 All 506 26,617 18,192 $1,553 $25 $1.5 Regulation D** 27,710 18,350 $1,555 $24 $1.4 Source: EDGAR Form D filings from September 23, 2013 to December 31, 2014.

Rule 506(b) vs. Rule 506(c) September 23, 2013 - December 31, 2014 Rule 506(c): Amounts Raised Rule 506(b): Amounts Raised Non Funds- Funds - Funds - Initial Incremental Incremental 34% Non Funds- 43% 23% Initial 11% Non Funds - Incremental Non Funds - 2% Funds- Incremental Funds- Initial 2% Initial 41% 44% Source: EDGAR Form D filings from September 23, 2013 to December 31, 2014.

Most active non-fund issuers by amount sold: 2009 -2014 10.1% Banking 33.2% 16.0% Other 17.2% 12.5% Real Estate 12.5% 37.5% Technology 12.4% 8.8% Health Care 9.0% 10.0% Energy 8.5% 1.6% Manufacturing 3.8% 1.6% Retailing 1.4% 0.3% Agriculture 0.8% 0.8% Business Services 0.6% 0.2% Restaurants 0.3% 0.5% Travel 0.2% 0% 5% 10% 15% 20% 25% 30% 35% 40% 2014 2009-2013 Source: EDGAR Form D filings from 2009 to 2014. Amended (Form D/A) filings excluded

Distribution of non-fund issuers by reported revenue: 2009-2014 1.4% Over $100 million 0.9% 1.6% $25 milion - $100 million 0.8% 3.3% $5 million - $25 million 2.1% 5.0% $1 million - $5 million 4.3% 12.7% $1 - $1million 11.1% 17.6% No Revenues 15.6% 2.7% Not Applicable 1.9% 55.8% Decline to Disclose 63.1% 0% 10% 20% 30% 40% 50% 60% 70% 2009-2013 2014 Source: EDGAR Form D filings from 2009, to 2014. Amended (Form D/A) filings excluded

Issuer state of solicitation, incorporation and primary place of business: 2009-2014 DE NV MD NC GA OH CT States of Incorporation States of Solicitation PA Principal States of Business CO WA IL FL MA TX Soliciting in Foreign Issuers All States------> NY CA 0 10,000 20,000 30,000 40,000 50,000 60,000 Source: EDGAR Form D filings in 2009-2014. Excludes capital raised through amended offerings – Form D/A.

Investors in the Regulation D market September 23, 2013 - December 31, 2014 Total number of investors Mean investors per offering Median investors per offering New offerings New offerings All new All new All new offerings that report that report offerings offerings investors investors Rule 506(c) 20,563 10 15 2 6 Funds 7,202 17 22 5 15 Non-Funds 13,361 8 12 1 5 Rule 506(b) 343,872 14 17 4 6 Funds 114,480 17 25 3 8 Non-Funds 229,392 13 15 4 6 Source: EDGAR Form D filings from 2009 to 2014. Amended (Form D/A) filings excluded

Use of financial intermediaries by type of Regulation D issuer: 2009-2014 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Hedge Fund Private Equity Venture Capital Other Financial Real Estate Non-Financial Fund Fund Investment Services (Operating) Fund 2009-2013 % Offerings with Intermediaries 2014 % Offerings with Intermediaries Source: EDGAR Form D filings from 2009 to 2014. Amended (Form D/A) filings excluded

Total fees paid by type of Regulation D issuer: 2009-2014 7% 6% 5% 4% 3% 2% 1% 0% Hedge Fund Private Equity Venture Capital Other Financial Real Estate Non-Financial Fund Fund Investment Fund Services (Operating) 2009-2013 Avg total fees 2014 Avg total fees Source: EDGAR Form D filings from 2009 to 2014. Amended (Form D/A) filings excluded