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 ?
M2 EQUITYBITES-June 4, 2018-Processa Pharmaceuticals announces USD6.88m from private placements
M2 PHARMA-June 4, 2018-Processa Pharmaceuticals announces USD6.88m from private placements
This rating will increase trusted private placements and projects across the region," said Sajithkumar P.K., director and chief executive officer of IBMC International.
18 September 2013 -- Washington DC-based securities firms regulator The Financial Industry Regulatory Authority (FINRA) said it has issued a new investor alert called Private Placements--Evaluate the Risks Before Placing Them in Your Portfolio to caution investors that investing in private placements is risky and can tie up their money for a long time.
Small private placements can be done simply with the help of an attorney, with the senior managers of the firm seeking the capital being responsible for selling and recordkeeping.
* The disclosure and due diligence requirements of a Rule 144A offering might come as a surprise to a company whose only experience in raising capital has been through traditional private placements.
Investors can provide expansion dollars through private placements
* Private placements. The proposed regulations generally provided that interests in a partnership are not readily tradable on the substantial equivalent of a secondary market if.
However, the private placement market is not exactly like the bank loan market: Private placements are mainly longer-term, fixed-rate debt, and borrowers in this market are on average larger and less information problematic than bank borrowers.
Private placements make up about one-third of Prudential's investment portfolio, Trank said.

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