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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
(Alliance News) - Galantas Gold Corp said Thursday it has raised GBP1.0 million through a private placing, which will go towards implementing optimisation initiatives for the Omagh gold mine in Northern Ireland.
Japan Gold Corp (CVE:JG) is set to raise up to C$5 million via a private placing mainly for exploration, it said Thursday.
Vendetta Mining Corp (CVE:VTT) (OTCMKTS:VDTAF) said it has now raised over C$1.6 million, after closing an additional private placing, which brought in C$.1.03 million.
Angus also said it raised GBP 2m by way of private placing.
Arabian Cement had set the price for its IPO at EGP 9 a share after a private placing was 11.3 times oversubscribed.
Gold and silver exploration company Condor Resources plc (AIM:CNR) has raised GBP2.5m through a private placing of 50,000,000 new ordinary shares with a nominal value of GBP0.01 each at a price of GBP0.05 per share, the company reported today.
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.
(SCL.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 target is to initially mine and ship 2m tonnes a year of iron ore by 2008, gradually increasing to between 3 and 5m tonnes.The funds for the research will be raised through a private placing of new ordinary shares at 12 pence per share.
A private placing would allow you to raise a small amount from a number of individuals and can be structured so that the investors do not have the same controls that a venture capitalist would look for.
The issue price corresponded to a value of NOK153m for Solstad Offshore ASA's share, which is 12.8% after the private placing.

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