Sutter Securities has an extensive team of experienced private placement professionals. Former principals at Bear Stearns, Wells Fargo, Paine Webber among other major firms have joined together to help fund both private and small cap public companies, including private investments in a public equity (PIPE) transaction.
What is a typical private investment in a public equity (PIPE) transaction?
- The company sells unregistered common stock to a small group of institutional investors via a private placement.
- The company generally agrees to file a registration statement with the SEC to register these securities within 30-60 days after the placement.
- The price per share is at a discount to the recent average price and is negotiated with the investors.
- Most PIPEs include the issuance of a warrant to purchase additional common stock. The warrant exercise price is generally a modest premium to the placement price.
- A PIPE transaction can be executed quickly upon completion of due diligence.
Why should a company consider a PIPE?
- There is no up-front SEC registration
- Limited risk to the market price of the common stock as the transaction is confidential until it is consummated.
- The company can increase/decrease the size of the transaction based upon investor interest.
- New institutional investors become shareholders
- Limited marketing time and costs.
- Most transactions can be completed in less than 60 days.