INVESTOR’S TIPS: Is a private placement a good investment?
Like As we all know, private placements are a funding round of securities which are sold outside of a public offering and mostly to a small number of chosen investors.investments in companies that are privately owned. In other words, tThese placement can be can be sold by:
- Private companies; these are non-negotiable companies whose shares are negotiated outside ofin the public stock market, like NYSE, NASDAQ, AMEX, etc.
- Through private investment in public equity, which are the selling of publicly traded common shares, preferred stocks or convertible security to private investors.
- Or, via a standby equity distribution agreement. Basically, a relatively flexible and customizable type of share allocation agreement between a company and an investor.
So, is a private placement is a good investment method or not? Let’s see the advantages:
Advantages of investing in private placements:
- Private placements implyies lower expenses in commissions and advertising. Once the company starts trading its shares publicly, they tend to increase their price considerably, which would allow the investor to sell their shares at a greater price.
- In some cases, private placements are not made to become public. And the good news is you don’t have to register with the SEC, nor require public disclosure of the company’s statements.
- As an investor, you’ll have the chance to participate in the purchase of shares for a portion of the project (i.e. construction of office/apartment buildings, condos, malls, airports, etc.), and once the project is sold (usually after several years), the investor receives the return plus a percentage for procedures.
- The main risk factor is the concern about about thewhether the company will participatione of the company in the stock market or not -(meaning, whether it will be traded in a public stock market). Many elements factors can affect a company’s profitability;, the delay or even deny the refusal of participation ofor a private company in the stock market can negatively affect your investment profit and liquidity.
- Some private companies are family businesses that have grown and become important players in their respective markets. However, it’s often difficult for the owners to give up control, which something that happens when most of the company’s shares are sold in a public stock market.
- Another factor is thethe financialcompany’s financial health, accounting records or outdated tax returns. A company must present extensive regulation documents to obtain the necessary permissionts to market its shares in the public stock market. If the financial health of the company is not on point, if the accounting books are not in order, or if there i’s any inconsistency, it will delay or even deny negate the company’s participation in the stock market.
Finally, if the private placement is done in a company that has no intention of going to the public stock market (i.e. a development project) then the risk will can be rather associatedrelated withto company’s rate of success and theits project’sshares’ liquidity success as such.
Can Private Placements could become your best investment option?
In many cases, private placement offers carry oncome with certain sales restrictions, sometimes specific conditions are imposed for the share’s sale due to theforbidding it daysfor days or even years after the company begins its participation in the public stock market.
In consequence, if the company sells decides to participate in the stock market, the value of itsthe shares may rise when the owners (who don’t share these have restrictions) make the shares’ sale of them.
But Nonetheless, there is’s something an investment avenue out there that can be represent a better and safer choice for you, a mix between:
- The liquidity of a publicly-traded stock
- The advantages of private equity.
We’re talking about a New Asset Class introduced by Konzortia Capital, a holding company for a FinTech fintech consortium that -with its venture capitalprivate sale of preferred stocks- that aims to redesign the financial world that everyone takes for granted.
The best part? They’re still on theirYou still have a chance to participate on their private sale phase, which means they’re offering to visionary investors the opportunity to participate at their ground-floor level with special advantages and preferences. Click on the link below and find out exactly why this private company what this new asset class isis your best investment option.