The Globe and Mail quotes Toronto lawyer Grant McGlaughlin in an article on share offerings this summer.
Pension plans and other institutional investors are becoming increasingly common sources of capital for takeovers; these financings are known as private investments in public equities, or PIPEs. In a recent study, law firm Fasken found that the size of PIPEs is growing – the average stock sale was $113-million last year, up 18 per cent from 2020.
Fasken lawyer Grant McGlaughlin said PIPEs are expected to become increasingly common in share sales, in part because in choppy markets, companies want a seal of approval from a major institution when they try to sell stock. “Markets have been volatile and are likely to remain so, and PIPEs offer attractive protections for investors,” said Mr. McGlaughlin, co-leader of Fasken’s private-equity group.
“With COVID-19, the war in Ukraine, inflation and worldwide supply shortages creating continued uncertainty in the economy, capital markets are expected to continue to be volatile,” said the Fasken report. “A PIPE can act as an effective financing while securing a strategic partner, and in the case of those issuers facing tough times, allows for the raising of significant capital without selling the entire business at a depressed value – particularly in volatile markets.”
