Private Investment in Public Equity - PIPE

AAA

DEFINITION of 'Private Investment in Public Equity - PIPE'

A private investment firm's, mutual fund's or other qualified investors' purchase of stock in a company at a discount to the current market value per share for the purpose of raising capital. There are two main types of PIPEs - traditional and structured. A traditional PIPE is one in which stock, either common or preferred, is issued at a set price to raise capital for the issuer. A structured PIPE, on the other hand, issues convertible debt (common or preferred shares).

INVESTOPEDIA EXPLAINS 'Private Investment in Public Equity - PIPE'

This financing technique is popular due to the relative efficiency in time and cost of PIPEs, compared to more traditional forms of financing such as secondary offerings. In a PIPE offering there are less regulatory issues with the SEC and there is also no need for an expensive roadshow, lowering both the costs and time it takes to receive capital. PIPEs are great for small- to medium-sized public companies, which have a hard time accessing more traditional forms of equity financing.

RELATED TERMS
  1. Equity

    1. A stock or any other security representing an ownership interest. ...
  2. Common Stock

    A security that represents ownership in a corporation. Holders ...
  3. Hedge Fund

    An aggressively managed portfolio of investments that uses advanced ...
  4. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
  5. Securities And Exchange Commission ...

    A government commission created by Congress to regulate the securities ...
  6. Secondary Offering

    1. The issuance of new stock for public sale from a company that ...
Related Articles
  1. Options & Futures

    Hedge Funds: Higher Returns Or Just ...

  2. Options & Futures

    Hedge Funds Hunt For Upside, Regardless ...

  3. Mutual Funds & ETFs

    Mutual Fund Basics Tutorial

  4. Mutual Funds & ETFs

    What does a mutual fund's beta coefficient ...

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center