Private placement (or direct placement) is the act of selling securities to an individual or a selected number of investors instead of selling them to the general public. This act is only valid if the seller issues an approved notification to the Securities and Exchange Commission (SEC).
The target buyers for a private placement are usually institutions with considerable financial assets, such as banks or insurance companies.
Securities fall under the purview of the SEC but a private placement is not registered with them. However, the party issuing the sale must notify the SEC through a Private Placement Memorandum (PPM).
Private placement sales can be faster than those of public offers, so investors opt for private placement to speed up the sale of the items and thereby raise capital quickly for their own business.
Synonyms
direct placement
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