Private placement

(redirected from Private Placing)

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 ?
Angus also said it raised GBP 2m by way of private placing.
Ortac Resources Ltd has announced that it has bought a 12% stake in Casa Mining Ltd by taking part in a private placing, giving it an interest in three mining permits in the South Kivu province in the Democratic Republic of Congo.
5m through a private placing of 50,000,000 new ordinary shares with a nominal value of GBP0.
Additional funding of EUR145m was secured by Permanent TSB Finance, the car finance subsidiary of the bank, through a private placing secured against its Irish car finance loan book.
JO), an independent, Pan-African, upstream oil and gas company, has reviewed a number of potential capital raising opportunities to fund its current and future operations, but has determined it will not complete a private placing of shares.
The funds for the research will be raised through a private placing of new ordinary shares at 12 pence per share.
ANGLESEY Mining is proposing to raise up to pounds 464,000, by way of a private placing of up to 11,600,000 new ordinary shares at 4p a share.
5 million three-year, eight per cent convertible, participating TV production bonds by a private placing by SP Angel & Co.
38m shares at 13p each in a private placing with a number of private institutions.
75m via a private placing, enabling it to develop its online education portal digitalbrain.
Tricord raised $3m in December 1998 from a private placing in which the lead investor was Rod Canion, founder and former chief executive of Compaq Computer Corp (CI No 3,561).
1 million private placing (net of expenses) and its ordinary shares were admitted to trading on AIM on 20 July 2005.

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