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. Hedge Funds: Higher Returns Or Just ...
    Options & Futures

    Hedge Funds: Higher Returns Or Just ...

  2. Hedge Funds Hunt For Upside, Regardless ...
    Options & Futures

    Hedge Funds Hunt For Upside, Regardless ...

  3. Mutual Fund Basics Tutorial
    Mutual Funds & ETFs

    Mutual Fund Basics Tutorial

  4. What are the benefits and costs (or ...
    Mutual Funds & ETFs

    What are the benefits and costs (or ...

comments powered by Disqus
Hot Definitions
  1. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  2. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  3. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  4. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  5. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
  6. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
Trading Center