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Private Placements
A curated selection of private market opportunities.
What is a Private Placement?
AS DEFINED BY FINRA (FINANCIAL INDUSTRY REGULATORY AUTHORITY).
A private placement is an offering of unregistered securities to a limited pool of investors. In a private placement, a company sells shares of stock in the company or other interest in the company, such as warrants or bonds, in exchange for cash.
Private placements are regulated by a series of U.S. Securities and Exchange Commission rules known as Regulation D, or Reg D. Under Reg D, companies can issue varying amounts of securities based on the type of investor they are selling them to—accredited or non-accredited investors—without registering those securities with the SEC.
Benefits.
Private placements generally offer enhanced yields and returns. Additionally, these investments typically have strong negotiated covenants and capital structure seniority unique to each deal, intended to protect investors.
As private placement investments span a wide range of industry sectors in developed as well as emerging markets, adding them to a traditional portfolio provides exposure to asset classes which are either underrepresented or unavailable in the listed markets. The private investments are also effective in diversifying a portfolio which primarily includes traditional stock and bond holdings.
Risks.
Private placements are less liquid than public stocks and equities. They are buy and hold investments and are not traded on primary or secondary markets. As there are no trading markets, pricing of private placements can sometimes be difficult to determine. Additionally, the financial statements are sometimes unaudited as there is no requirement that Issuers have them audited.
Private placements are not appropriate or suitable for all investors. Offers and sales are only made via a private placement memorandum to investors meeting stringent qualification standards and should only be presented to accredited investors or qualified purchasers as described by the Securities Act of 1933.
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