Private Investment in Public Equity

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Private Investment in Public Equity (PIPE)

Occurs when private investors take a sizable investment in publicly traded corporations. This usually occurs when equity valuations have fallen and the company is looking for new sources of capital. This is a means by which a public company gets additional access to the equity markets in express mode-- they already have public shares trading and this is an additional offering to investors under a securities purchase agreement, the issuer promises to register the shares typically via a resale registration statement within so many days after the closing.

Private Investment in Public Equity

The form of equity financing in which a private investment company purchases a certain amount of stock in a publicly-traded company at a discount from its market value. Publicly-traded companies commit to PIPE in order to raise equity without going through expense and regulatory issues involved in making a secondary offering. This form of financing is popular especially with small and medium-sized publicly-traded companies, as they often lack the resources to raise capital using other methods.

There are two types of PIPE. A traditional PIPE allows the private investment company to simply buy stock in the publicly-traded company. This is a direct form of equity financing. A structured PIPE, however, involves the publicly-traded company issuing a certain amount of convertible debt. This carries less risk for the private investment company and does not dilute the publicly-traded company's shares outstanding, at least not immediately. See also: Venture capital.
References in periodicals archive ?
Nasdaq: KBIO), today announced it has entered definitive agreements with institutional and accredited investors in connection with a private placement, or PIPE financing.
198) Logically, if less companies are available for reverse mergers, less PIPE financing will also be available from hedge funds for start-up companies, further constricting credit markets.
a biotechnology company focused on discovering and developing treatments for rare and life-threatening diseases, today announced it has entered definitive agreements with institutional investors in connection with a private placement, or PIPE financing.
7 million in non-cash expense in the first quarter of 2015 and 2014, respectively, resulting from the liability accounting related to the warrants issued in connection with the PIPE financing completed in June 2012.
5 billion as financial companies used PIPE financing structures to recapitalize after massive loan losses.
NEW YORK, November 3 /PRNewswire/ -- NGN Capital led a US$32 million PIPE financing of Javelin Pharmaceuticals, Inc.
The closing of the PIPE financing is subject to standard closing conditions.
4 million in non-cash income related to the revaluation of PIPE warrants which were issued in connection with a PIPE financing completed in June 2012.
She also has experience representing biotechnology and medical device companies in matters related to technology licensing transactions, sponsored research, follow-on offerings, PIPE financing and assisting public companies in going private.
Upon closing of the PIPE financing, Ur-Energy will receive gross proceeds of approximately $5.
and international clients who seek capital formation and business strategies including the preparation and implementation of alternative public offerings, PIPE financing, acquisitions, corporate governance development, regulation and compliance, among other services, all executed concurrently to provide a seamless transition to a United States-listed public company.