A PIPE transaction is a "Private Investment in Public Equity" and is viewed as an alternative to an initial public offering for companies with a market capitalization under $400 million that seek an equity infusion of less than $75 million.
PIPE transactions involve privately issued equity or equity-linked securities that are sold to accredited investors under Regulation D by public companies. Issuers range in size from small OTC companies to large cap, New York Stock Exchange-listed companies. Transaction sizes range from under $1 million to over $200 million.
While a PIPE transaction is marketed to a limited number of investors over a short period of time, a traditional public transaction may require a broader marketing process and the filing of a registration statement with the Securities and Exchange Commission prior to pricing.