Private Investment in Public Equity

Key Highlights

• A Private Investment in Public Equity (PIPE) is when a publicly traded company sells shares or similar securities directly to private investors, like hedge funds or private equity firms, instead of offering them on the stock market.

• Types of PIPE transactions include traditional and structured PIPE.

What is Private Investment in Public Equity?

A Private Investment in Public Equity (PIPE) is when a publicly traded company sells shares or similar securities directly to private investors, like hedge funds or private equity firms, instead of offering them on the stock market. It’s a quick way to raise money without the hassle of a public offering.

How it Works?

• The company sells new shares, treasury shares, or securities (like convertible bonds) to big investors at a discount to make the deal attractive.

• These deals are faster and have fewer rules than public stock offerings, saving time and costs.
  Investors get a bargain, but the shares might be harder to sell right away.

Types of PIPE Transactions

• Traditional PIPE: It involves a company selling common or preferred stock to investors at a set price.

• Structured PIPE: Involves the sale of convertible securities (such as convertible debt or preferred stock), sometimes with adjustable pricing features

Why it’s Used?

• Companies get cash fast for things like growth, acquisitions, or paying off debt, especially when public offerings aren’t ideal.

• Investors get discounted shares with the chance for big profits if the company does well.