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    Privateplacements 120918140432 Phpapp02

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    ankthegoodboy
    Private placement is a non-public offering of securities to a limited number of investors, rather than through a public offering. It allows companies to raise funds privately from qualified investors in a fast and cost-effective manner. Some advantages include flexibility in funding amounts and terms, and the ability to choose preferred investors. However, private placements also have disadvantages like difficulty finding investors, potential for insufficient funds raised, and illiquidity of securities. Regulations govern how listed companies can issue securities through private placements or qualified institutional placements.

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    Privateplacements 120918140432 Phpapp02

    Uploaded by

    ankthegoodboy
    34 views10 pages
    Private placement is a non-public offering of securities to a limited number of investors, rather than through a public offering. It allows companies to raise funds privately from qualified investors in a fast and cost-effective manner. Some advantages include flexibility in funding amounts and terms, and the ability to choose preferred investors. However, private placements also have disadvantages like difficulty finding investors, potential for insufficient funds raised, and illiquidity of securities. Regulations govern how listed companies can issue securities through private placements or qualified institutional placements.

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    Private Placement of SEcurities

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    privateplacements-120918140432-phpapp02

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    Private placement is a non-public offering of securities to a limited number of investors, rather than through a public offering. It allows companies to raise funds privately from qualified investors in a fast and cost-effective manner. Some advantages include flexibility in funding amounts and terms, and the ability to choose preferred investors. However, private placements also have disadvantages like difficulty finding investors, potential for insufficient funds raised, and illiquidity of securities. Regulations govern how listed companies can issue securities through private placements or qualified institutional placements.

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    © All Rights Reserved
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    Download as pdf or txt
    34 views10 pages

    Privateplacements 120918140432 Phpapp02

    Uploaded by

    ankthegoodboy
    Private placement is a non-public offering of securities to a limited number of investors, rather than through a public offering. It allows companies to raise funds privately from qualified investors in a fast and cost-effective manner. Some advantages include flexibility in funding amounts and terms, and the ability to choose preferred investors. However, private placements also have disadvantages like difficulty finding investors, potential for insufficient funds raised, and illiquidity of securities. Regulations govern how listed companies can issue securities through private placements or qualified institutional placements.

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    Private Placement

    -presented by
    Nirooj Fidin
    Amrita Kumari
    Definition

    A process of inviting subscription to the securities of a


    corporate issuer by means other than public offering.
    Private placement usually refers to non-public offering of
    shares in a public company.
    Instruments issued in private placements are common stock,
    preferred stock or other forms of membership interests,
    warrants or promissory notes (including convertible
    promissory notes), bonds and debentures.
    Unlike public offerings, the number of investors can be at
    most 49.
    The company has to be listed on a stock exchange.
    Why private placement?

    Public offerings have limitations w.r.t market


    variables, cost and time.
    Strategic objectives
    Consolidation of stakes of promoters
    Induct a strategic investor or joint venture partner
    Provide management stakes to working directors and
    senior management
    Implement a employee stock option plan
    Advantages

    Fast and cost effective.


    Choice of investors.
    Flexibility in type and amount of funding.
    Easier to negotiate on return.
    Less amount of scrutiny.
    Disadvantages

    Difficult to find investors.


    Danger of insufficient funds.
    Limited investors.
    Illiquidity.
    Preferential Allotment

    Private placement of shares or of convertible


    securities by a listed company to selected group
    of investors is called preferential allotment.
    Investors may have a lock-in period.
    The listed companies has to abide by the guidelines as
    per Chapter XIII of SEBI (DIP), in addition to
    requirements in Companies Act, 1956.
    Guidelines

    Pricing – Issue, warrants, convertible debentures)


    Currency of financial instruments
    Non-transferability of financial instruments.
    Currency of shareholders’ resolution
    Other requirements
    Certified by auditor
    Copies to shareholders
    Independent valuation
    Qualified Institutional Placement

    QIP is another tool, whereby a listed company can


    issue equity shares, fully and partly convertible
    debentures, or any securities other than warrants
    which are convertible to equity shares to a QIB.
    Introduced by SEBI to prevent listed companies in
    India from developing an excessive dependence on
    foreign capital.
    Compliance with guidelines in Chapter XIIIA of SEBI
    (DIP).
    Guidelines
    Listing
    Investors
    Pricing
    Adjustments in price
    Currency of security
    Shareholders’ resolution
    Placement document
    Number of allotees
    Restrictions on amount raised
    Transferability of securities
    Role of Merchant Bankers
    That’s all, folks!!!

    Thank you

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