Private Investment in Public Equity - Explained
What is a PIPE Deal?
Written by Jason Gordon
Updated at October 13th, 2021
- Marketing, Advertising, Sales & PR
- Accounting, Taxation, and Reporting
- Professionalism & Career Development
-
Law, Transactions, & Risk Management
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
- Business Management & Operations
- Economics, Finance, & Analytics
- Courses
What is a Private Investment in Public Equity?
A private investment in public equity (PIPE deal) is when a public company sells some of its shares (either common shares or preferred shares) directly to private investors - rather than selling the shares to the general public through a securities exchange.
How Does a PIPE Deal Work?
Because a PIPE deal is a direct offering of securities, it must be registered separately with the Securities and exchange commission or quality for a registration exemption as a private placement. A firm that trades publicly is able to use PIPE deals to secure financing for acquisitions, working capital, and expansion. The process generally allows the company to secure capital more rapidly than pursuing sale of shares to the public.