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Impact of Covid–19 coronavirus on private fundraisings – key legal considerations for investors and issuers

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Brendan Hannigan

Partner

Singapore

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James Mythen
James Mythen

Partner - ASEAN

Singapore

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Samengo-Turner William
William Samengo-Turner

Partner

London

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Sugianto Osman

Partner, Ginting & Reksodiputro in association with Allen & Overy

Jakarta

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Evans Alun
Alun Evans

Partner

Singapore

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Alfadya Dion
Dion Alfadya

Counsel, Ginting & Reksodiputro in association with Allen & Overy

Jakarta

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Jokelson Tom
Tom Jokelson

Senior Associate

Singapore

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06 May 2020

Whilst the full impact on private fundraisings and the growth capital sector will not be seen for some time, it is clear that the days of free flowing cash for growth companies are coming to an end. 

Investors are heightened to the potential risks and liabilities associated with new investments, with some shifting focus to their existing portfolios and ensuring those businesses are sufficiently capitalised to ride out the inevitable global downturn. 

There will undoubtedly be regional differences, but the sector is almost certainly going to slow in terms of overall activity in the short to medium term. However, high cash-burn companies will still need to come to market in the coming months and there remains record amounts of cash available for deployment.

As with any significant disruption, new opportunities will arise, particularly in sectors such as technology and life sciences. We are seeing both Investors and Issuers having to adjust their expectations as to the timing and contractual terms required to successfully close fundraising processes, and Issuers are looking increasingly at alternative financing options to running a full equity round.

We have summarized below certain of the key legal and market issues which both Investors and Issuers should consider in light of Covid-19.

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