Pipes: A Guide to Private Investments in Public Equity

Between the world of private placements, in which large financial institutions make long-term investments in companies, and the world of public stock markets, which are open to all and regulated by the Securities and Exchange Commission, come PIPEs: private investments in public equity. PIPEs allow hedge funds and even wealthy individuals to get much of the liquidity of investing in public securities, while letting the issuer avoid much of the burden of SEC regulations. This backdoor entrance to the public markets has been abused in the past by offshore issuance of unreported stock and structured deals that earned the name""toxic securities"" because they generally caused the issuer to fail. Both of these practices have declined, but many people remain suspicious of all PIPE transactions. Dresner and Kim clear some of the lingering confusion in this collection of 12 essays by different authors exploring the legal and financial aspects of PIPEs. Like many technical investment books, the quality of the writing in this book is uneven, and there is quite a bit of repetition and self-promotion. Several of the chapters are excellent, however, including Chapters Five through Seven on the legal aspects of PIPEs and Chapter 12 on due diligence. (This last chapter's author, however, is also one of the worst self-promotion offenders). Other chapters suffer from thin substance and turgid writing. Another problem is the relentlessly upbeat tone that results from all authors earning their livings doing PIPEs, without balance from academics, regulators or PIPE critics. Since there are few other books on the subject, PIPE specialists might find enough useful material here to justify the book's high price, but most people will be happier with Bierman's Private Equity combined with a good text on public securities.