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2012 Photonics Industry Private Placements

Photonics is Fertile Ground

Private placements in development stage and high growth photonics businesses are robust. In 2012, a reported $16 billion in almost 900 transactions goes to work commercializing technology and scaling businesses with core enabling technology in photonics.

Private placement transactions for target companies including equity and debt are researched with closing, effective, or announce dates from January 1 through December 31, 2012.  Transactions volumes, values, geographies and market segments are analyzed. Values are in $US at historical rates of exchange. Follow this link to transaction detail.  <2012 Jan to Dec Photonics Private Placements>

Activity

Transaction Volume

The Biophotonics sector that includes Diagnostics, Medical Devices, Therapeutics and Imaging saw the most activity - more than one-third of the total number of transactions.  The Diagnostics sub-segment accounted for 15% of the total number of transactions - largely companies employing fluorescence detection methods to protein and cell based diagnostic assays and drug development.

The Solar segment followed in volume of transactions (15%). Given the current overcapacity and consolidation experienced in the industry today, this relatively high level of investment in development stage companies is indicative of the segment's future growth. Following closely in volume (12%) is the Packaged LED and Luminaire segment of the Lighting sector - far surpassing LED device level placements, but evidence that solid state lighting technology is mature and commercially viable on a massive scale.  The next most active is the Display segment - primarily later stage companies scaling manufacturing operations to the meet the demand for phone and tablet consumer goods.

Transaction Value

The Semiconductor Equipment segment of the Advanced Manufacturing sector accounted for almost one-third of the total value.  In this segment, ASML announced a private placement valued at almost $5 billion to be issued to Intel, Samsung and TSMC. Following in value is the Display segment of the Information Technology sector.  In this segment, Wintek Vietnam Co. closed more than $600 million in equity financing to grow manufacturing operations for ipad and iphone touch screen displays.

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Very large transactions valued at more than $500million account for only 1% of the total number of transactions. More than 90% of placements range in value from $10,000 to $50 million.

The Targets

Development and Growth Stage of Maturity

The lion's share of private placements, roughly 90%, are made by development or product launch stage companies realizing less than $10 million revenue and no earnings.  

Combined, these pre-earnings companies report employing more than 40,000 - an extremely conservative sum given that 60% of the issuers did not report number of employees.  This supports a plethora of research concluding that virtually all of the growth in U.S. jobs has been driven by the formation of firms less than five years old and these new firms have been disproportionately responsible for commercializing the cutting-edge innovations that characterize modern life. Referencing the Kauffman Foundation Study, The Importance of Startups in Job Creation and Job Destruction, new firms add an average of 3 million jobs in their first year, while older companies lose 1 million jobs annually.

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Geography

In line with the private placement market as a whole, the Unites States and Canada saw 2 to 3x the volume of transactions as Europe and Asia/Pacific. 

The Transactions

Follow this link to transaction detail.  <2012 Jan to Dec Photonics Private Placements>