ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A private placement is a sale of stock shares or bonds to pre-selected investors and institutions rather than publicly on the open market. It is an alternative to an initial public offering (IPO) for a company seeking to raise capital for expansion.

Detailed explanation-2: -Private placement is the allotment of securities by a company to institutional investors and some selected individuals. It helps the company to raise funds for capital more quickly than through a public issue.

Detailed explanation-3: -Private placement is an issue of stock either to an individual person or corporate entity, or to a small group of investors. Investors typically involved in private placement issues are either institutional investors, such as banks and pension funds, or high-net-worth individuals.

Detailed explanation-4: -Types of Private Placement Qualified Institutional Placement: In this mode of private placement, a listed company is able to issue shares or other securities to only institutional buyers. It is a way of encouraging the listed companies to raise capital from the domestic market.

Detailed explanation-5: -While the entity that creates and sells a bond or another type of security is referred to as an issuer, the individual who buys the security is an investor. In some cases, the investor is also referred to as a lender.