Scribd
Upload
117 views11 pages

Private Placement: Presented By: Avishek Bose ITMB09/13

Private placement involves the sale of securities to a small number of select investors as a way to raise capital. It allows companies to raise funds from large investors like banks, mutual funds, insurance companies, and pension funds without having to file a prospectus or disclose detailed financial information. While it provides time and cost savings over public offerings, private placements also have disadvantages like limited funds from investors and securities often being sold at a discount. The process involves board approval, issuing application forms, share allotment, and filing forms with regulatory agencies. Regulations specify requirements around minimum allottees and individual share limits. Recent examples of companies raising funds through private placements are provided.

Uploaded by

souravmukhuti
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
117 views11 pages

Private Placement: Presented By: Avishek Bose ITMB09/13

Private placement involves the sale of securities to a small number of select investors as a way to raise capital. It allows companies to raise funds from large investors like banks, mutual funds, insurance companies, and pension funds without having to file a prospectus or disclose detailed financial information. While it provides time and cost savings over public offerings, private placements also have disadvantages like limited funds from investors and securities often being sold at a discount. The process involves board approval, issuing application forms, share allotment, and filing forms with regulatory agencies. Regulations specify requirements around minimum allottees and individual share limits. Recent examples of companies raising funds through private placements are provided.

Uploaded by

souravmukhuti
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 11

PRIVATE

PLACEMENT
Presented by:
Avishek Bose
ITMB09/13
WHAT IS PRIVATE PLACEMENT?

The sale of securities to a relatively small


number of select investors as a way of raising
capital
PARTIES INVOLVED:
 large banks,
 mutual funds,
 insurance companies and
 pension funds
 Merchant bankers
ADVANTAGES:
 does not have to be registered with SEBI
 detailed financial information is not
disclosed
 the need for a prospectus is waived
 the average investor is only made aware of
the placement after it has occurred.
 Time & cost savings
 private placements enable small businesses
to maintain their private status.
DISADVANTAGES
 Suitable investors may be difficult to locate
 may have limited funds to invest
 privately placed securities are often sold at a
deep discount below their market value
 investors want compensation for taking a
greater risk and assuming an illiquid position
STAGES
 Pass the board resolution for approval of issue.
 Issue of share application forms to applicants.
 Receipt of share money from applicants.
 Pass the board resolution for allotment of
shares.
 Filing of electronic form 2 with the ROC.
 Issue of share certificates to concerned
allottees.
 Obtain Secretarial Compliance Certificate from
the practicing Company Secretary
OTHER POINTS:
 Application forms should not be circulated to
more than 50 persons.
 In case of allotment of shares to NRI/Non-
residents should be made in accordance with
the FEMA.
 In case of allotment of shares to mutual
funds, financial institutions, the respective
agreements should be signed and executed.
REGULATIONS
 the company needs to issue a minimum of
10% of the securities issued under the
scheme to mutual funds.

 Moreover, it is mandatory for the company to


ensure that there are at least two allottees,

 if the size of the issue is up to Rs 250 crore


and at least five allottees if the company is
issuing securities above Rs 250 crore.
 No individual allottee is allowed to have
more than 50% of the total amount issued.
 Also no issue is allowed to a QIB who is
related to the promoters of the company.
RECENT QIPS:
 Unitech successfully raised $325 million
through a QIP in mid-April 2009
 Indiabulls Real Estate and PTC India raised Rs
2,657 crore and Rs 500 crore, respectively,
through such placements.
 HSIL Successfully Raises `150 Cr Through QIP
Placement
THANK YOU

You might also like