YOGYAKARTA What is private placement? What are the advantages of issuers and investors from the private placement mechanism? What is the impact of the private placement on stock prices? Check out the following explanation.
As an information, private placement is a method of collecting funds in the capital market. This action is quite often carried out by corporations who want to get additional capital.
One of the corporations that plans to get additional capital through a private placement mechanism is PT Bank CIMB Niaga Tbk. This banking issuer with the ticker code BNGA has obtained a license for the implementation of Capital Increase without Pre-emptive Rights (PMTHMETD) or private placement.
Private placement is an act of selling shares and securities directly to certain investors and limited groups.
Because it is private, private placement transaction activities are not carried out in public, as are public offerings that require registration and supervision from the capital market authorities.
The mechanism is to invite several investors or groups of investors who are selected to take part in a private placement. These investors will get new share offers directly from issuers.
Generally, investors invited to private placement are large-modal investors, such as insurance companies, banks, mutual funds, and other financial institutions.
By offering shares directly to investors on standby, the percentage of shares owned by old investors will experience dilution or decrease. Share portion for old investors will decrease due to additional capital from substitute investors.
Companies or corporations that conduct private placements have the potential to get a number of benefits, such as:
Meanwhile, the profits obtained by investors when fulfilling a private placement invitation from the company are:
Private placement can have a psychological impact, especially for old investors. Because it can reduce the percentage of share ownership.
The decline in the share ownership portion can make stock prices also contract. In addition, this corporate action can also reduce share prices due to oversupply. This can happen if the number of shares issued is many or not comparable to the demands in the market.
That's information about what private placement is. Hopefully this article can add insight to the loyal readers of VOI.ID.
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