Private placement

(redirected from Private placements)

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 ?
Small private placements, some under $1 million, are common in start-up or early financing rounds for companies that might have otherwise considered venture capital investments.
The disclosure and due diligence requirements of a Rule 144A offering might come as a surprise to a company whose only experience in raising capital has been through traditional private placements.
Investors can provide expansion dollars through private placements
However, the private placement market is not exactly like the bank loan market: Private placements are mainly longer-term, fixed-rate debt, and borrowers in this market are on average larger and less information problematic than bank borrowers.
After the private placements, Aura Gold has 34,930,718 common shares issued and outstanding on a non-diluted basis, and 42,330,718 shares on a fully diluted basis.
Capital markets in the 1980s were quite open to middle-market companies, from bank financing, the junk-bond market, and private placements to a generally booming equity market.
All securities issued under the private placements are subject to a hold period of 4 months and one day.
The Company is pleased to announce that its private placements announced on February 24, 2006, 1st tranche closing announced on February 28, 2006, (the "Initial Private Placement") has been over-subscribed.
OTC: ILKG), today announced the completion of two private placements with institutional and other accredited investors raising a total of $2,000,000.
Wycliffe") is pleased to announce that it has completed two private placements for gross proceeds of $482,000.
The securities issued pursuant to both private placements are subject to a four month hold period ending March 29, 2006.
Atlantic-Pacific Capital, one of the largest independent global placement agents for alternative investment funds and direct private placements, announces the addition of Terry Wetterman, Jr.

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