What is a Private Placement
A private placement is a capital raising event that involves the sale of securities to a relatively small number of select investors. Investors involved in private placements can include large banks, mutual funds, insurance companies and pension funds. A private placement is different from a public issue in which securities are made available for sale on the open market to any type of investor.
BREAKING DOWN Private Placement
A private placement has minimal regulatory requirements and standards that it must abide by. While it is a capital raising event involving the sale of securities, it is a method of capital raising that does not have to be registered with the U.S. Securities and Exchange Commission (SEC). Its investors include a small pool of entities and individuals. The investment does not require a prospectus and in many cases, detailed financial information is not disclosed.