Private Placements

A private placement is a process of inviting subscription the securities of a corporate issuer otherwise than through a public offer.


Private placement is the act of placing a new issue of shares with a group of selected financial institutions (Dictionary of banking and finance)

The transferring of securities to a small selected group of investors. The sale of bond or other security directly to a limited number of investors. (Bloomberg)


Private placements are mainly for fund raising.

But sometimes they are made for strategic objectives.

Strategic reasons

1. Consolidation of stakes of promoters.
2. Induct a strategic investor or a joint venture partner
3. Provide stakes to working directors and senior management.
4. Implement a employee stock option plan.
5. Reward shareholders with bonus issues.

Private Placement Route for Fund Raising

1. Early state venture capital
2. Later stage private equity
3. Other institutional investors
4. Non institutional investors
5. International capital markets