What is "Private Placement" with reference to Securities Market?

The sale of securities to a relatively small number of select investors as a way of raising capital. Investors involved in private placements are usually large banks, mutual funds, insurance companies and pension funds. Private placement is the opposite of a public issue, in which securities are made available for sale on the open market.Since a private placement is offered to a few, select individuals, the placement does not have to be registered with the Securities and Exchange Commission. In many cases, detailed financial information is not disclosed and a the need for a prospectus is waived. Finally, since the placements are private rather than public, the average investor is only made aware of the placement after it has occurred.

Issuance of bonds to secondary market without registering to stock market.

AGREE WITH MRS SREEDEVI  ANSWER  

Private placements are transactions whereby a company issues new shares and sells them privately.

 

Sreedevi has explained the answer in detail. Just to add a little, such placements are organised by Investment and Private bankers to support an institution by infusing additional capital by new promoters or ultra high net worth individuals (UHNWI) or a local bank.  

In simple language where the securities are purchased by some common group of investors and public is not given an option and no propectus is issued.

private placement

The sale of an issue of debt or equity securities to a single buyer or to a limited number of buyers without a public offering. Theplacement is generally conducted by an investment banker who acts as an agent in bringing together the seller and the buyer(s). Case Study For companies needing investment capital, private placements often save time and fees compared to public offerings. Inearly 2000 Healtheon/WebMD Corporation issued $930 million of new stock directly to the Janus funds. From Healtheon's standpoint,the issue was taken care of quickly without the need to pay a hefty fee to the firm's investment banker, Morgan Stanley Dean Witter(now Morgan Stanley). From Janus's standpoint, the firm was able to obtain a small discount on a sizeable block of stock it wanted tobuy. In addition, Janus wasn't required to take a chance on bidding up the price of Healtheon stock by buying shares in the openmarket. Shares included in the private placement increased Janus's stake in Healtheon from 3% to 12%, a relatively large position fora mutual fund.

Thanx for invitation .. i agree with sreedivi

Thanks Sir for your Invitation... It is the sale of securities, bond, debt, and equity to a limited number of investors or single buyer instead of public

I am with Mrs. Sreedive answer.

A private placement is a method of raising capital where in a firm offers shares for sale to a small number of investors mainly large banks, mutual funds, insurance companies and mutual funds. These shares are not offered in public as in IPO. Companies prefer this way when they need to raise capital faster.