PIPE (Private Investment in Public Entities) deals are up 100% in France thus far in 2008, more than twice the number (five) as last year. PIPEs represent a good way for firms to invest money in down markets as they they allow firms a flexible method for a healthy and quick return thanks to pricing discounts, short term liquidity options and creative structuring. The smaller size of PIPEs allows companies to sell only enough shares to raise what cash they need and are comparable to small public offerings that are confidentially marketed to a limited number of institutional investors.
French PIPE deals this year include Colony and Eurazeo raising their stakes in hotel operator Accor to around 30% and AXA Private Equity’s 11.43% stake in electrical components company Carbone Lorraine. Look for more PIPE deals from Mid-cap French private equity firms to continue at a high clip for the next year.