Private placement

(redirected from Direct 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 ?
The Governmental Accounting Standards Board (GASB) released an Exposure Draft (ED) in late June 2017, titled Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements.
In the Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements ED, the GASB has proposed that state and local governments provide the following additional disclosures regarding debt in the notes to the financial statements:
Overall we anticipate that revenues for the full year will show modest growth with pre-exceptional profit in line with the prior financial year and that our second-half net direct placements will pick up materially over the first half.
Electric utility Central Vermont Public Service Corp (NYSE:CV) reported on Friday the completion of the sale of 1,498,745 shares of its common stock under the at-the-market offering programme in open market trading and direct placements.
The unit helps all age groups with assisted and direct placements designed to enhance the transition from benefit dependency to full time employment.
Because industrial insured exemptions are complete exemptions to the doing-business laws, certain in-state activities by insurers that are prohibited in direct placements are permissible under industrial insured placements.
In general, however, they take the form of either a direct placement statute or an industrial insured statute.