What is a private placement?
A private placement, or a directed new issues, means that a company raises capital by offering shares to a few selected investors instead of offering the shares to the general public (such as in an IPO or an open rights issue).
This method is very common among unlisted companies because it is significantly faster, cheaper, and has fewer regulatory requirements than public distributions. The investors in a private placement are typically venture capital firms, business angels, or institutional investors, as well as platforms like Accumeo.
Advantages for the company
- Speed — The process does not require the same heavy documentation, such as an approved prospectus.
- Strategic choice of owners — The company can select strategic investors who can contribute more than just capital, such as expertise or networks.
- Lower costs — No costs for prospectus review, marketing to the public, etc.