NEW YORK, Oct. 18 – Paradigm Genetics of Research Triangle Park said Wednesday it was planning to raise gross proceeds of $28 million through a private offering of its equity to institutional investors.
The company said it hired investment bank JPMorgan H&Q to sell 5.1 million of its shares for $5.50 a share to unnamed institutional investors.
Paradigm said it expected to close the transaction by Oct. 22. The money will be used to help the company to develop its metabolomics platform, to step up its business development efforts, and to boost its working capital reserves. Paradigm said it would also consider using the proceeds to acquire or invest in business and technologies.
The structure of the deal, which is known as a PIPE, or private investment in public equity, is commonly used by publicly traded companies during periods of uncertainty in the capital markets. By offering shares at below-market prices, publicly traded companies hope to drum up demand for their shares that might not exist in the open market.
Paradigm’s shares closed down 57 cents, or 9.3 percent, at $5.55 in trading on the Nasdaq on Wednesday.
Paradigm Genetics is a functional genomics company focused on the areas of human health, nutrition, crop production, and industrial products.