Warrants on the Rise

In the current climate, many issuers have undoubtedly hit some hard headwinds when raising financing as some clouds roll into the market. Many of us are preparing for what will likely be a challenging year ahead.

At Computershare, our decades of experience working with a global client base of issuers and investors through good times and bad puts us in a unique position when it comes to financial markets.

We see clear trends emerge, such as a push by Canadian companies to make their securities DTC eligible or the increased use of subscription receipts to help manage M&A activity. We also act as a bellwether, observing the fluctuations in the volumes of debt or equity financings in the local economies and sectors where we operate.

Which is all the more interesting in these unprecedented times. We're seeing a trend in one specific security type – warrants – that hasn't slowed at all but in fact, seems to be increasing. Among the clouds of uncertainty, is it possible that warrants are on the rise?

Warrants provide investors with the optimism of a financial gain that occurs in lockstep with its sister share. As investors contemplate the current market, those holding an optimistic outlook and viewing today's prices as temporary will clearly embrace the addition of warrants to an offering. It should come as no surprise that issuers are using this easy addition to financing in a pandemic world. The warrant is sweeter than ever for many investors, especially those focused ahead to a time when the market has healed, and issuers appear to be catching on.

At Computershare, we act as the warrant agent for countless issues, listed and non-listed, that we manage all under one roof. As the father of boy/girl twins, I like to tell people that the combined warrant and share issuances are akin to raising twins. Warrants and share issuances come into the world together as a unit, both comprised of the DNA of the issuer. Computershare takes care of each, managing their registers and dealing with their common and differing needs as required, allowing the issuer to concentrate on its core business. We are accustomed to launching new warrant issuances as well as managing everyday transfers and exercises for many of our small-cap clients.

Attracting financing when frayed nerves are creating caution will require more effort than usual but adding warrants to the mix may be just the tonic for more and more issuers, no matter the size, in these challenging but not impossible times. Every issuer needs a roadmap out of this jam. Warrants just might be part of the route forward.

What's your take on warrants? Take this short poll and I'll share the aggregate results in my next blog. For more information about how a warrant agent can help, reach out to me directly at Karl.Burgess@computershare.com or to your local Computershare contact.