A presentation on private placements in India. If you like my presentation, please share. And I would like to know your thoughts, so comment and let me know.

1. Private Placement
-presented by
Nirooj Fidin
Amrita Kumari

2. Definition
A process of inviting subscription to the securities of a
corporate issuer by means other than public offering.
Private placement usually refers to non-public offering of
shares in a public company.
Instruments issued in private placements are common
stock, preferred stock or other forms of membership
interests, warrants or promissory notes (including convertible
promissory notes), bonds and debentures.
Unlike public offerings, the number of investors can be at
most 49.
The company has to be listed on a stock exchange.

3. Why private placement?
Public offerings have limitations w.r.t market
variables, cost and time.
Strategic objectives
Consolidation of stakes of promoters
Induct a strategic investor or joint venture partner
Provide management stakes to working directors and
senior management
Implement a employee stock option plan

4. Advantages
Fast and cost effective.
Choice of investors.
Flexibility in type and amount of funding.
Easier to negotiate on return.
Less amount of scrutiny.

5. Disadvantages
Difficult to find investors.
Danger of insufficient funds.
Limited investors.
Illiquidity.

6. Preferential Allotment
Private placement of shares or of convertible
securities by a listed company to selected group
of investors is called preferential allotment.
Investors may have a lock-in period.
The listed companies has to abide by the guidelines as
per Chapter XIII of SEBI (DIP), in addition to
requirements in Companies Act, 1956.

7. Guidelines
Pricing – Issue, warrants, convertible debentures)
Currency of financial instruments
Non-transferability of financial instruments.
Currency of shareholders’ resolution
Other requirements
Certified by auditor
Copies to shareholders
Independent valuation

8. Qualified Institutional Placement
QIP is another tool, whereby a listed company can
issue equity shares, fully and partly convertible
debentures, or any securities other than warrants
which are convertible to equity shares to a QIB.
Introduced by SEBI to prevent listed companies in
India from developing an excessive dependence on
foreign capital.
Compliance with guidelines in Chapter XIIIA of SEBI
(DIP).

9. Guidelines
Listing
Investors
Pricing
Adjustments in price
Currency of security
Shareholders’ resolution
Placement document
Number of allotees
Restrictions on amount raised
Transferability of securities
Role of Merchant Bankers

10. That’s all, folks!!!
Thank you
For more details, go to Private Placement