Private Investment In Public Equities (PIPES)

Investments in unregistered (restricted) securities of a publicly traded company, usually at a discount to the then-prevailing price of the company's registered common stock. Publicly-traded companies commit to PIPEs in order to raise equity without going through expense and regulatory issues involved in making a secondary offering. This form of financing is popular especially with small and medium-sized publicly-traded companies, as they often lack the resources to raise capital using other methods.

There are two types of PIPE. A traditional PIPE allows the investors to simply buy stock in the publicly-traded company. This is a direct form of equity financing. A structured PIPE, however, involves the publicly-traded company issuing a certain amount of convertible debt. This carries less risk for the investors and does not dilute the publicly-traded company's shares outstanding, at least not immediately.