What is a PIPE offering?

“PIPE” stands for “private investment in public equity.” In a PIPE offering, investors commit to purchase a certain number of restricted shares from a company at a specified price. The company agrees, in turn, to file a resale registration statement so that the investors can resell the shares to the public.

Can PIPE offerings dilute the value of existing shares?

To the extent that they increase the supply of a company’s stock in the market, PIPE offerings can potentially dilute the value of existing shares. “PIPE” stands for “private investment in public equity.” In a PIPE offering, investors commit to purchase a certain number of restricted shares from a company at a specified price.

Can a publicly traded company use a pipe?

A publicly-traded company may utilize a PIPE when securing funds for working capital to fund day-to-day operations, expansion, or acquisitions. The company may create new stock shares or use some from its supply, but the equities never go on sale on a stock exchange.