Private placement

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Private placement

The sale of a bond or other security directly to a limited number of investors. For example, sale of stocks, bonds, or other investments directly to an institutional investor like an insurance company, avoiding the need for SEC registration if the securities are purchased for investment as opposed to resale. Antithesis of public offering.

Private Placement

The sale of a new issue to a few large institutional investors without registering with the SEC. A private placement is exempt from SEC registration, subject to certain restrictions, because it is not offered to the general public. In order to make a private placement, the issuer must file a private placement memorandum (PPM), which explains exactly why the issue complies with SEC Regulation D exempting certain companies from registration; this is done to protect both the issuer and the investors. According to Regulation D, a PPM must contain a complete description of the security and the terms of the sale. It must also include applicable information about the issuer's financial situation and applicable risk factors. Private placement is also called direct placement.

private placement

The sale of an issue of debt or equity securities to a single buyer or to a limited number of buyers without a public offering. The placement is generally conducted by an investment banker who acts as an agent in bringing together the seller and the buyer(s).
Case Study For companies needing investment capital, private placements often save time and fees compared to public offerings. In early 2000 Healtheon/WebMD Corporation issued $930 million of new stock directly to the Janus funds. From Healtheon's standpoint, the issue was taken care of quickly without the need to pay a hefty fee to the firm's investment banker, Morgan Stanley Dean Witter (now Morgan Stanley). From Janus's standpoint, the firm was able to obtain a small discount on a sizeable block of stock it wanted to buy. In addition, Janus wasn't required to take a chance on bidding up the price of Healtheon stock by buying shares in the open market. Shares included in the private placement increased Janus's stake in Healtheon from 3% to 12%, a relatively large position for a mutual fund.

Private placement.

If securities are sold directly to an institutional investor, such as a corporation or bank, the transaction is called a private placement.

Unlike a public offering, a private placement does not have to be registered with the Securities and Exchange Commission (SEC), provided the securities are bought for investment and not for resale.

References in periodicals archive ?
Hosted at AT&T (NYSE: T) along with all NetChemistry securities procurement products, the new platform will dramatically improve the way broker dealers, accredited investors and issuing companies work together to complete private offerings.
Hosted at AT&T (Nasdaq: ATT) along with all NetChemistry securities procurement products, the new platform will dramatically improve the way broker dealers, accredited investors and issuing companies work together to complete private offerings.
Marada has advised its private investors, whom have also been coerced and harassed by the SEC, that it intends to vigorously defend the private offerings.
He primarily handles mergers and acquisitions, public and private offerings of equity, and public and private offerings of debt.
4 million private offering in March 2004, registered for resale the shares owned by the March investors as well as investors in prior private offerings by the company.
Holders of Series A Preferred are entitled to preemptive rights to participate in future private offerings of SmartServ's securities, subject to customary exceptions.
While YBI and its bank lenders expect to execute the definitive documentation relating to the amended and restated facility prior to the consummation of the previously announced private offerings of senior notes and senior subordinated notes, there can be no assurance that the amended facility will be executed.
private offerings by reviewing, structuring, and substantiating
GSI saw increased demand for its services, which include business, financial and competitive information about public companies, public and private offerings, M&A transactions, individuals and material contracts.
Hosted at AT&T (Nasdaq:T) along with all NetChemistry securities procurement products, the new platform will dramatically improve the way broker dealers, accredited investors and issuing companies work together to complete private offerings.
The alliance announced today between E*Trade and Wit SoundView validates the reality of an Internet marketplace for private offerings - a marketplace that Direct Stock Market pioneered and leads today.