Share Placement
A placement is when a company issues new shares directly to institutions or larger investors, rather than offering them to all existing shareholders.
Quick Reference:
Faster than rights issue. For large investors. Raises capital.
Expanded Explanation:
Placements are common because they allow companies to quickly raise alrge sums of money. Instead of asking every shareholder, the company goes directly to investment funds or super wealthy investors, offering them shares at a lower price than the market.
This can be good for the company because it strengthens its balance sheet, but it dilutes existing shareholders, since more shares are now on issue. Unlike a rights issue, small investors usually don’t get the chance to participate. For beginners, it’s useful to know that placements can move the share price, especiialy if the discount is large or if investors are sensitive about dilution.