Opinion: In volatile markets, companies tap a PIPE to cash

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In volatile markets, companies tap a PIPE to cash

Three days after Russia invaded Ukraine and spooked anyone considering investing in Europe, Halifax-based Chorus Aviation Inc. launched a bet-the-house takeover of one of the largest EuropeanFinding cash to pay for the US$855-million purchase of London-based Falko Regional Aircraft would have been tough at the best of times. The price tag on this deal is 50 per cent larger than the Canadian aviation company’s market capitalization.

Chorus funded the bulk of the US$445-million cash portion of the Falko purchase by setting up what’s known as a PIPE financing – short for Private Investment in Public Equity – with an arm of Brookfield Asset Management Inc. PIPE investments feature in a number of recent takeovers, with deep-pocketed Canadian funds backing expansion strategies at mid-sized domestic companies.

 

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