The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Kestrel flies high

Most innovative convertible Issuer: Kestrel Amount: $125 million Bookrunner: Morgan Stanley Dean Witter

Morgan Stanley's convertible bond deal for Kestrel Solutions was the first outing for an innovation the firm has dubbed a "going-public convertible debt offering". It offers an effective solution to two problems: first, it satisfies a demand from investors who want to participate in a firm's potentially significant upside following an IPO but who cannot invest in IPOs or in companies which are private, or both. And second, it provides a cheaper source of funding for a company than a last round of mezzanine or venture capital.

"We noticed that there was a group of companies who had the potential to register gains of 200% or 300% in the first weeks after an IPO, and keep those gains, yet who still had to give up to 100% appreciation to those investing in their last round of pre-IPO funding," says Brooks Harris, head of convertible origination at Morgan Stanley Dean Witter. "And also there was a class of investor whose charters would not allow them to invest in pre-IPO companies who might have to wait until up to two years after the IPO before getting an opportunity to invest."

The terms of the deal keep all the elements necessary for a successful IPO in place.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree