For beginner investors who are just entering the investment world, there are many terms and concepts that need to be understood. One of which is “private placementsor private placement. Private placement is one way for companies to raise funds by selling stock or other financial instruments to selected investors.
Unlike a public offering, a private placement is carried out exclusively to certain investors, such as investment companies, banks or individuals with high levels of wealth.
Currently, many millennials are interested in investing. For example, after winning while playing at W88 alternative link, many choose to invest their money. As a new investor, you need to know the various terms that are widely used when investing.
Term “private placements” became increasingly popular after PT GoTo Gojek Tokopedia Tbk (GOTO) announced their intention to carry out the stunt. For new investors who are not familiar with this term, it is important to understand what private placement actually means so that they can make the right decisions when investing.
In a private placement, the company seeking funding does not issue stock publicly on the public market. Instead, they sell stocks or financial instruments to investors who are selected based on certain criteria.
Typically, private placements are conducted on a smaller scale than public offerings, so that the company can maintain greater control over its shareholders. However, private placement also has its own risks that novice investors need to understand before considering investing through this route.
Private Placement Purpose
Private placement aims to strengthen capital. Generally, strengthening capital is done with the aim that the company can maintain its business continuity. In addition, the fresh funds collected can also be used to pay debts and company operational costs.
For the banking sector, the capital collected through private placement can be used to encourage the growth of the lending business. On the other hand, capital strengthening is also carried out to meet the requirements set by law and regulators.
For example, the banking sector may conduct a private placement to meet the core capital obligation of 3 trillion rupiah. In addition, a private placement can also have other goals, such as increasing the share ownership of one investor. However, the impact also means reducing the portion of other investors’ holdings.
Through a private placement, companies can secure additional capital that is important for the growth and continuity of their business. However, as an investor, it is important to understand the implications of this capital strengthening action and its potential impact on the shareholding structure.
With a good understanding of private placements, investors can make more informed investment decisions and consider the risks and benefits associated with strengthening capital.
Impact of Private Placement
Private placement can have an impact on the percentage of investor ownership in the company. In general, public companies can be owned by several investors.
However, by offering shares to an investor through a private placement, it will automatically increase the portion of ownership for that investor. On the other hand, other investors’ holdings will indirectly be diluted or reduced.
In making investment decisions, investors need to consider the impact and implications of strengthening capital through this private placement. The company will receive additional capital to support business growth, but changes in the shareholding structure may affect the value of other investors’ holdings.
In addition, an increase in the number of shares outstanding can also have an impact on the company’s stock price. With a good understanding of private placements, investors can make more informed investment decisions and calculate the risks and benefits associated with strengthening capital.