The commercial impact of COVID-19 is causing many businesses to experience decreasing revenues (in some cases, due to mandated shutdowns) or higher costs. As a result of dwindling cash flows, ASX-listed companies have started to seek to raise capital to shore up their balance sheets – and in worsening economic times, this trend is likely to increase.

This economic reality does, however, provide opportunities for cashed up institutions and sponsors with appropriate mandates, to invest in private investment in public entities (PIPE) transactions. PIPEs can take various forms, including:

• placements of ordinary shares to a 'cornerstone' investor;
• pro rata entitlement offers of ordinary shares to existing shareholders (EOs), underwritten (or sub-underwritten) by a 'cornerstone' investor – these are often combined with placements;
• issues of preferred securities or convertible notes to a 'cornerstone' investor. Sometimes, these are combined with entitlement offers or placements of ordinary shares.

If you are an ASX-listed company needing to raise capital, or an investor considering participating in such a transaction, this guide provides an overview of PIPEs and their different forms, and the key matters to consider in undertaking them.