What is meant by private placement

A private placement is a sale of securities to a select group of investors, typically institutional or accredited investors, rather than to the general public. It is a private alternative to issuing securities through a public exchange, such as an initial public offering (IPO). In a private placement, the securities are not publicly offered, and the sale is not required to be registered with the Securities and Exchange Commission (SEC). This allows the issuer to avoid the regulatory requirements and costs associated with a public offering, as well as provides more flexibility in terms of structuring the offering and the securities themselves.

Private placements are often used by companies seeking to raise capital without giving up ownership or control of the company, and they can be a quicker and less expensive way to raise funds compared to public offerings. However, they are also less liquid and may offer less transparency than publicly traded securities.