Private Investment In Public Equities (PIPES)

This pertains to the buying of shares of stock that is publicly traded at a discount price. The price is below the current market value (CMV) per share, and this is commonly a practice among mutual funds, investment firms, as well as other big accredited investors. It may either be traditional or structured. A traditional PIPE issues common or preferred stock at the investor’s set price, while a structured PIPE issues common or preferred shares of convertible debt. The issuer of the stock utilizes a PIPE for the purpose of raising capital for the public company, a financing method that is more efficient compared to secondary offerings because there are fewer regulatory issues with the SEC.

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