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Flexible loan-for-equity deal provides alternative to rights issue

Private Investment in Public Equity (PIPE), a long established source of finance for public companies in the US, is now available to companies listed on stock exchanges across the Asia Pacific region. A PIPE fund, backed by some of the world's leading financial institutions, is making this flexible financing instrument available to companies listed on stock exchanges in the region with minimum market capitalisation of $50m (or equivalent). The fund will provide loan-for-equity finance available for drawdown at the borrowers' discretion. The PIPE deal is facilitated through UK-based global alternative funding advisors Equility Capital.

Equility's Australian associate in Melbourne, Richard Symon, said: "PIPE provides flexible finance which can be used for acquisitions, specific projects or kept as a reserve to exploit opportunities. The process usually takes no longer than six weeks from signing of the term sheet, and is a time and cost saving alternative to going to market with a rights issue. In the US, PIPE has come to be regarded as a mainstream instrument, although it has still to be adopted on such a wide scale in the rest of the world."

PIPE in the US has developed into a $50bn market with the process evolving into a straightforward and efficient transaction, needing no more than the stock exchange and ticker code to generate an offer of funding and a term sheet, usually within days. The fund prefers companies operating in growth or emerging markets and regions, and each deal is assessed on its individual merits.

Source: IndiaPRWire

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