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.
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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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.

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References in periodicals archive ?
The stake of non-Egyptians "Arabs and foreigners" recorded 52.3 percent, while the share of Egyptians reached 47.7 percent of the total (public and private offerings).
The company has raised USD45m from the private offerings. Around 7.63 million shares of common stock were issued at a price of USD5.90 per share.
16 October 2013 -- US crowdfinance industry market data solutions firm Crowdnetic said that its private offerings content suite of companies publicly raising capital online will now be featured on Dow Jones' leading finance portal MarketWatch.
Regulation D comprises five rules which are the warp and woof of the regulatory fabric of private offerings: Rule 501 sets forth definitions of terms used in the Regulation, most notably that of accredited investor, which for our purposes means individuals with a $1 million net worth (home and car included), or with consistent minimum annual income of $200,000.
Both offerings will be at the same common share purchase price of USD 2.75 as paid by the investors in the private offerings.
Promptly following the closing of the private offering, the company will commence a rights offering of approximately USD 5.0m to existing shareholders at the same common share purchase price of USD 2.75 as paid by the investors in the private offerings.
The company stated that under earlier Subscription Agreements, it will issue about USD2.1m common shares to its directors, officers and affiliates and also commence a rights offering of about USD5.0m to existing shareholders, both at the same common share purchase price of USD2.75 paid by the investors in the private offerings.
21 September 2012 - Pennsylvania-based bank holding company Customers Bancorp said that it issued a total of 7,111,819 shares of common stock in two private offerings, the second of which closed September 20 for a total offering amount of approximately USD 85m at USD 14 per share.
M2 EQUITYBITES-September 7, 2011-Three Nuveen closed-end funds price private offerings of over USD312m of VMTP shares(C)2011 M2 COMMUNICATIONS
M2 PHARMA-August 15, 2016-Arrowhead Pharmaceuticals completes private offering
On October 4, the company announced that its private offering was oversubscribed around 10.83 times, recording a strong demand of c.LE 21 billion ($1.2B), with demand coming from over 280 institutional and high net worth investors.
BANKING AND CREDIT NEWS-January 16, 2013-United Community Financial opens USD42m private offering and USD5m rights offering(C)2013 M2 COMMUNICATIONS