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PIPE
- Private Investment in Public Equity
According to CFO magazine, once a
finance option of last resort, private investment in public equity
(PIPE) deals are going mainstream. The financing instrument, which
involves selling equity securities in public companies to accredited
private investors, has become safer for issuers and far more common.
An estimated 116 PIPEs closed in
the first half of 2004, compared with just 68 deals in all of 2000,
according to Thomson Financial. This year's transactions have
generated $3.8 billion in funding so far.
The PIPEs of the 1990s "almost
universally came with negative covenants," explains Ben Howe,
CEO of Boston-based America's Growth Capital. Desperate for funding,
companies agreed to such draconian terms as "death
spirals," which allowed investors to convert their holdings
into more shares as the stock fell, diluting the stock exponentially
if it continued to perform poorly. Today, many are straight
common-stock transactions sold at a 10 to 15 percent discount on the
stock's market price. And the average deal size has increased to
more than $10 million, attracting the attention of larger, more
reputable investors like Fidelity Investments.
"Now PIPEs are recognized as a
legitimate tool," says Eleazar Klein, a partner at law firm
Schulte Roth & Zabel LLP in New York. "They're not this
sleazy thing that's going to kill your company." For example,
Ultimate Software Group Inc., a $60 million Weston, Fla., maker of
workforce-management software, completed its second PIPE in May. CFO
Mitchell Dauerman says he had reservations when he first considered
the instrument, but quickly became more comfortable after conducting
due diligence. "It's a way for us to get quality long-term
investors into the stock," he says. Two large mutual funds
invested in both of the company's PIPEs.
If
you are interested in getting funding through PIPE, please
send your request to info@aciba.org.
We will be happy to e-mail you the details..
美中国际商会免费推荐
如果需要通过上市股票抵押取得融资的相关服务，请发电子邮件：info@aciba.org，或致电(310)528-5511。
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