Union Capital has entered into an agreement to invest $5 million in Mktg (NASDAQ: CMKG), an alternative marketing and media communications agency. The investment is structured as $2.5 million in Senior Secured notes, $2.5 million in convertible preferred stock and warrants to purchase 2.4 million shares of common stock. The company started looking for additional sources of working capital after it suffered losses, its revolving credit facility was suspended and it had a reduction in advance payments by clients.
Minority investments in public companies have been an increasingly popular investment type for private equity investors since the economic meltdown. According to the PitchBook Platform, over $7 billion has been invested in this manner by PE firms in 2009, which is down from $13 billion in 2008, but well above the $1.8 billion invested in 2007. Many of the 2009 investments have been sought by companies in need of capital as a result of the economic recession, like Leonard Green & Partners' $425 million PIPE in Whole Foods Market. The two biggest industries for these investments have been Financial Services and Consumer Products and Services - two of the harder hit industries in the recent economic downturn.