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Funding Patterns in the North American Specialty Chemicals Industry

Funding Patterns in the North American Specialty Chemicals Industry

Historically, small-sized firms in the specialty chemicals industry have struggled to raise funds from capital markets due to the volatility in their financials. Their reliance is more on private equity (PE) and venture capital (VC) funding to sustain operations and investment. Small companies that have well-established research and development (R&D) or distribution capabilities get quickly acquired by larger companies if they are unable to raise enough cash to sustain their growth.

Medium companies with revenues greater than $􂀀 million have been able to secure significant amounts of funding from capital markets. They predominantly rely on debt financing with a growing scale of operations so they can benefit from financial leverage.

Large companies maintain a stable debt-to-capital ratio with a marginal tendency towards leveraging. They, however, vary their debt levels depending on the expected interest rates in the market. The US Federal Reserve’s gradual withdrawal of quantitative easing measures is likely to see large companies increase their reliance on equity financing to avoid higher interest expenses arising from debt.

The bond markets have been dominated by corporate medium term notes (MTNs) due to their characteristic flexibility in structure and documentation. MTNs are closely followed by the traditional mode of debt financing through corporate debentures. In the equity market, shelf-registration, followed by public investment in private equity (PIPE) deals, have been the most popular mode of funding due to their lower cost of issuance.

About this report

This study provides a breakdown of the fund sourcing and deployment patterns in the North American specialty chemicals industry. Historical funding trends were analyzed to provide insights into the mode of funding (debt or equity), the instruments used to raise these funds, and the funding patterns across small-, medium-, and large-sized companies. In addition, the current and future trends that drive funding requirements in this industry were analyzed and used as a basis for providing estimates of future funding requirements.


  • Executive Summary
    • Key Findings
  • Key Terms and Definitions
  • Introduction
    • Research Objectives and Scope
    • Research Methodology
  • Historical Fund Sourcing Patterns
    • Equity as a Source of Funding
      • Table Specialty Chemicals Industry: Cumulative Distribution of Equity Value by Type, North America, 2009-2015
    • Debt as a Source of Funding
      • Table Specialty Chemicals Industry: Average Fixed Income Offering by Type, North America, 2009-2015
    • Debt-to-Equity (DE) Mix
      • Table Specialty Chemicals Industry: DE Ratio of Firms with Revenue Specialty Chemicals Industry: DE Ratio of Firms with Revenue
      • Table Specialty Chemicals Industry: DE Ratio of Firms with Revenue Between $100 Million and $1 Billion, North America, 2009-2014
      • Table Specialty Chemicals Industry: DE Ratio of Firms with Revenue Greater than $1 Billion, North America, 2009-2014
  • Historical Fund Deployment Patterns
    • Fund Deployment Patterns-Firms with Revenue Less than $100 Million
      • Table Specialty Chemicals Industry: Sources and Deployment of Funds of Select Firms with Revenue Less than $100 Million, North America, 2009-2014
    • Fund Deployment Patterns-Firms with Revenue Less than $100 Million Discussion
    • Fund Deployment Patterns-Firms with Revenue Between $100 Million and $1 Billion
      • Table Specialty Chemicals Industry: Sources and Deployment of Funds of Select Firms with Revenue Between $100 Million and $1 Billion, North America, 2009-2014
    • Fund Deployment Patterns-Firms with Revenue Between $100 Million and $1 Billion Discussion
    • Fund Deployment Patterns-Firms with Revenue Greater than $1 Billion
      • Table Specialty Chemicals Industry: Sources and Deployment of Funds of Select Firms with Revenue Greater than $1 Billion, North America, 2009-2014
    • Fund Deployment Patterns-Firms with Revenue Greater than $1 Billion Discussion
    • Fund Deployment Patterns-M&A Buy-Side Analysis
      • Table Specialty Chemicals Industry: Statistics for Key Target Sectors in Specialty Chemicals Firms, North America, 2009-2015*
  • Estimation of Future Funding Requirements
    • Market Trends and Impact Analysis
    • Market Trends and Impact Analysis Explained
    • Estimation of M&A Deal Value for North American Specialty Chemical Firms
    • Estimation of Future Funding Requirements
      • Table Specialty Chemicals Industry: Expected Total Funding Requirements, North America, 2015-2020
      • Table Specialty Chemicals Industry: Total Fund Requirements Estimation, North America, 2015-2020
  • Fund Sourcing Estimation
    • Estimated Debt-to-Equity Proportion
    • Estimated Debt and Equity Proportions Across Revenue Ranges
    • Estimated Fund Distribution-Base Case Scenario
    • Estimated Fund Distribution-Base Case Scenario Discussion
    • Estimated Fund Distribution-Low Funding Scenario
    • Estimated Fund Distribution-Low Funding Scenario Discussion
    • Estimated Fund Distribution-High Funding Scenario
    • Estimated Fund Distribution-High Funding Scenario Discussion
  • Conclusion

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