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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
Existing NovellusDx shareholders, including OrbiMed Israel Partners II, L.P., Pontifax (Israel) IV LP, Helsinn Investment Fund SA, SICAR, and Windham Venture Partners have indicated that they will invest USD 10m in additional equity as part of a concurrent PIPE financing, which is expected to close immediately following and in connection with the closing of the merger.
Following the recent PIPE financing, Forbion holds about 8.7% of Curetis' share capital.
Some of the major milestones discussed by the company include the closure of a USD3m on PIPE financing; receipt of significant orders for its first product, a CDMA multiple handset, dual-mode phone.
(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.
Most recently, the company raised $13.9 million in October 2004, using a PIPE financing agented by S.G.
Hard on the heels of the IPO, Interchange raised another $15 million in a PIPE financing last December priced at $18.25 a share.
Biopharmaceutical company KaloBios Pharmaceuticals (NasdaqGM:KBIO) stated on Thursday that it expects to raise USD8.2m definitive agreements in connection with a private placement, or PIPE financing with institutional and accredited investors.
Proceeds from the PIPE financing may be used by the company for an acquisition as well as to advance its pipeline of drug candidates, including its lead compound, lenzilumab for the treatment of myelomonocytic leukemia (CMML).
Biopharmaceutical company AVEO Pharmaceuticals Inc (NASDAQ:AVEO) revealed on Friday that the company has signed a securities purchase agreement for expected gross proceeds of approximately USD61m in a private placement (PIPE financing).
Under the PIPE financing, the company will sell 4.5m shares of common stock at a purchase price of USD13.50 per share, which reflect an approximate 7% discount to the closing price on 28 October 2010.
Ernst served as Managing Partner at Grandview Capital Inc; where he specialized in executing capital market transactions for both private and public companies, including reverse mergers, PIPE financings, private placements and structuring transactions in Prior to joining Grandview Capital, Mr.
Career Highlights: Jackson has extensive experience in financings ranging from multibillion-dollar leveraged acquisitions to multimillion dollar venture capital and PIPE financings. His clients include J.P.