Usually, private equity firms take control of firms which are privately
held, and tend to act hidden. But, in recent years, the rising
phenomenon of private investments in publicly listed companies,
so-called PIPEs, could be observed. At first, this seems to be
inconsistent but, it could become a perfect way to generate good
returns. This book gives an overview about the PIPE market, and then
focuses on the role of private equity funds. How do they invest in
publicly listed firms? And what are their motivations? Is the overall
performance of PIPE deals superior to those of traditional private
deals? PIPE deals have much in common with typical venture capital deals
with regard to the young and high-risk nature of target companies, and
the minority ownership position. Surprisingly, buyout funds are
relatively more engaged in PIPEs than venture funds are. The author
analyzes deal sizes, industry sectors, holding periods, IRRs and
multiples of public deals, and comparable private deals with a unique
data sample on transaction level. Finally, he discusses other possible
motives for private equity firms to engage in these deals: improved
liquidity, fast process of deal execution, access to certain markets,
avoidance of takeover premiums and the thesis of an escape-strategy for
surplus investment money.