PIPE Transactions and Registered Direct Offerings: Alternative Capital Raising, PE Investment Opportunity

This CLE course will examine the mechanics of traditional private investments in public equity (PIPEs) as well as registered direct offerings. The panel will discuss short-term advantages and follow-up obligations for issuers, key terms, and issues for investors to consider when engaging in these transactions.

PIPEs and related transactions are gaining in popularity in the current market. They offer quick execution and access to capital because they are either exempt from registration under the Securities Act of 1933 or done as a "registered direct" transaction using an existing shelf registration. Given the need for quick access for capital and the difficulties of public reporting during the COVID-19 pandemic, PIPEs have become particularly attractive.

PIPEs provide hedge and private equity funds with an efficient way to make a substantial one-off investment in a public company and negotiate the terms of purchase. Key terms include pricing, deal structure and protective provisions, and possibly board seats and other control rights. Deal size may trigger shareholder approval requirements or SEC beneficial ownership reporting requirements; investors must analyze these issues when structuring the transaction.

Issuers might prefer to sell securities through a registered direct transaction, if a shelf registration is available, to avoid the need for future registration for resales (restricted securities are issued in PIPEs requiring a subsequent resale registration statement). Well known seasoned issuers, or WKSIs, may be able to file a new registration statement so they can immediately proceed with an offering. Counsel must fully understand the legal issues around registered direct transactions as well as the resale of PIPE securities.

Listen as our authoritative panel looks at market and legal trends in PIPEs and related transactions as a financing alternative. The panel will discuss issuer requirements and investor due diligence, PIPE terms, and negotiating points for both traditional and nontraditional PIPEs.