PIPE Transactions In Canada: Key Considerations For U.S. Investors

Private investment in public equity (PIPE) transactions have become increasingly common in Canada recently, a trend that has accelerated due to the impact of COVID-19 on financial markets and cash flow. Canadian companies seeking to strengthen their balance sheets are considering PIPEs as an alternative to more traditional capital markets financing options. In some cases, this is because PIPEs offer an attractive combination of flexibility, execution speed and certainty, and few regulatory hurdles. In others, it is because more traditional financing alternatives are simply not available. Either way, Canadian PIPEs frequently involve U.S.-based investors. For example, in April 2020, Oaktree Capital Management LP and Engaged Capital, LLC invested US$60M in SunOpta Inc., a plant-based food and beverages company, in exchange for exchangeable preferred shares, in May 2020, WildBrain Ltd., a global leader in kids and family entertainment, raised C$25 million from Fine