A private investment in public equity (PIPE) transaction is a privately negotiated sale of a public issuer’s equity or equity-linked securities to an investor, under which an issuer typically files a resale registration statement with the SEC to enable the PIPE investor to resell the PIPE securities in the public markets, from time to time.
A PIPE allows a public company to raise alternative financing via a private placement of securities to an accredited investor. This form of privately negotiated capital raise is often undertaken at a time when an issuer’s shares are undervalued or it encounters short-term liquidity issues, including when conventional financing sources may not be readily available.
This presentation provides an overview of the considerations, mechanics and strategies involved for a financial sponsor when executing a PIPE transaction in the United States. The presentation covers:
- The attractiveness of PIPEs in periods of economic volatility
- Key value protections
- Deal timing: structuring considerations
- Governance rights
- Resale registration rights
- Issuer protections
- Public disclosures
- Key documents
- Tear sheet of key issues and considerations and selected PIPEs
Published June 18, 2020.