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Private Placements in Photonics

Robust Market Keeping Pace with 2012

The market for private placements in development stage and high growth photonics businesses is robust. In 2012, a reported $16 billion went to work commercializing technology and scaling businesses with core enabling technology in photonics. In the first half of 2013, more than 450 investments in the same segments are topping $8 billion.

Private placement transactions for target companies including equity and debt are researched with closing, effective, or announce dates from January 1 to June 30, 2013.  Transactions volumes, values, geographies and market segments are analyzed. Values are in $US at historical rates of exchange. Follow this link to transaction detail.  <2013 Jan to June Photonics Private Placements>

 

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Activity

Transaction Volume

The Biophotonics sector that includes Diagnostics, Medical Devices, Therapeutics, Life Sciences and Imaging saw the most activity - 40% of the total number of transactions.  The Diagnostics segment accounted for almost 20% of the total number of transactions - largely investments in companies employing fluorescence, optical label-free, and imaging methods to protein and cell based diagnostic assays, drug development, and point-of-care devices.

The Information Technology sector followed in volume of transactions with 15% of the total volume of transactions crossing Display, Imaging, Communications, and Imaging segments. The most active is the Display segment - a mix of later stage investments to scale operations to meet demand for phone and tablet consumer goods and earlier stage investments in high definition, flexible, printed and 3-D displays.

The core Photonics sector that includes providers of optics, sources, detectors and materials also remains very active. The Materials & Coatings segment, realizing 6% of the total transactions, saw early and growth stage investments in nano and meta materials applied to medical diagnostic reagents, solid state LED lighting, advanced lithography, photovoltaics, medical imaging - as well as later stage investments in thin films and glass for consumer goods end markets.

Transaction Value

The Surveillance & Navigation segment of the Defense, Security & Sensing sector accounted for almost one-third of the total transaction value. In this segment, four individual transactions totaling almost $2.4 billion represent investments in Russian companies manufacturing optoelectronic and guided navigation systems primarily for defense, but also civilian applications.

Following in value are the Diagnostics and Medical Devices segments of the Biophotonics sector - each accounting for 10% of total transaction value.  In Medical Devices, SONY closed a $535 million transaction resulting in an 11.5% stake in Olympus Corporation, a worldwide leader in medical and industrial optical instrumentation with its largest business unit supplying medical devices for endoscopy. With the exception of $175 million in convertible debt raised by Opko Health, a pre-earnings company developing molecular diagnostics tests for Alzheimer’s disease, there was no single large transaction in the Diagnostics segment accounting for the overall high value in the segment.  There were many investments ranging from $5 to $40 million.

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Very large transactions valued at more than $500million account for only 1% of the total number of transactions. Almost two-thirds of private placements ranged in value from $1 to $50 million.

The Targets

Development Stage

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.  

Growth Stage

Unsurprisingly, targets in the more mature segments that are scaling manufacturing and distribution operations are the largest employers - Imaging, Display, Medical Devices, and Surveillance & Navigation.

Geography

Targets in the Unites States and Canada saw 3x to 4x the volume of transactions as in Europe and Asia/Pacific - not in line with the private placement market as a whole and not in line with similar analysis in 2012 where targets in the United States and Canada saw 2x the volume.

The Transactions

Follow this link to transaction detail.  <2013 Jan to June Photonics Private Placements>