Private placement

Understand the idea

The issuer and intermediaries approach prospective investors, provide the required information and negotiate or set the offer terms. Restrictions may limit resale or make a secondary market difficult. A placement can help an issuer raise funds without a broad public sale, but buyers may receive different information and liquidity protections from those associated with publicly offered and actively traded securities.

An example

Suppose a company offers J$500 million of five-year bonds to ten eligible institutions under the applicable local route. Eight institutions commit enough to complete the issue. The transaction raises financing, but the bonds may not be readily tradable by an ordinary household investor. The number of buyers alone does not establish that the offering qualifies for a particular legal exemption.

Sources

• Investor.gov: Private placements and their limits

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