Direct Placement

Direct placement

Selling a new issue not by offering it for sale publicly, but by placing it with one of several institutional investors. Also known as a private placement.

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direct placement

The sale of a new security issue to a limited number of large buyers rather than to the general public. Direct placement generally involves less expense to the issuer, although the buyer may be able to negotiate a more favorable price.

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Direct Placement

The sale of a new issue to a few large institutional investors without registering with the SEC. A direct placement is exempt from SEC registration, subject to certain restrictions, because it is not offered to the general public. In order to make a direct placement, the issuer must file a private placement memorandum, 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 sales. It must also include applicable information about the issuer's financial situation and applicable risk factors. A direct placement is more commonly called a private placement.