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Private Placement

A practical alternative for raising capital.
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Private Placement

Hear Michael Campion, Brian Thomas, and Dianna Carr provide an overview of private placements.
A private placement is the private sale or “issue” of corporate debt or equity securities by a company or “issuer” to a select number of investors. It is another way that you can raise capital, versus selling a publicly offered security or establishing a traditional bank credit arrangement.

Three key features classify a securities issue as a private placement:
  • The securities are not publicly offered
  • The securities are not required to be registered with the Securities and Exchange Commission (SEC)
  • The investors are limited in number and are “accredited”
Traditionally, middle-market companies like yours have issued debt in the private placement market directly with a private placement investor, such as a large insurance company or other institutional investor, or through an agent (often an investment bank), who then solicits bids from several potential investors. Larger transactions (US$100 million+) are typically done with an agent. It’s possible for there to be as few as one investor for any issue. A private placement issuance is a way for institutional investors to lend to you in a similar fashion as banks, with a “buy-and-hold” approach, and with no required trading or public disclosures. Historically, banks refer to investments as making “loans,” whereas insurance companies purchase “notes.”
Investment focus
  • Middle-market companies with attractive growth prospects and positive cashflow
  • Company revenue minimum of US$50 million
  • Management teams and active ownership with an economic stake in the company’s success
  • Ability to provide senior debt investments between US$10 - US$300 million in size
  • Ability to provide subordinated debt investments between US$10 - US$100 million
Typical uses
  • Debt refinancing
  • Debt diversification
  • Expansion and growth capital
  • Acquisitions
  • Stock buyback / recapitalisation 
  • Taking a public company private 
  • Employee Stock Ownership Plan (ESOP)
Structural characteristics
  • Senior debt and/or subordinated debt
  • Principal repaid after senior debt has been fully amortised
  • Combination of cash coupon and deferred interest
  • Ability to provide senior debt alongside junior capital for a seamless, one-stop solution with a single, relationship-oriented capital partner
  • Typical maturities: three - 25+ years
  • Flexible payment structures, including amortising or bullet, and fixed or floating rate
Issuer benefits
  • Relationship-focused capital provider
  • Holistic approach to evaluation
  • Ability to fund transactions in multiple currencies
Typical Size
  • US$10 million - US$300 million
Types of Private Placements
There are many types of private placements but the most common is long-term, fixed-rate senior debt. Like bonds or bank loans, private placement debt securities can either be secured, meaning they are backed by collateral, or unsecured, where collateral is not required.

In addition to senior debt, other types of private placement debt issuances include subordinated debt, asset backed loans, leases, and shelf issues.
“Pricoa Private Capital has been a supportive partner for more than a decade. The Pricoa team’s deep knowledge of our business and creativity in customising a financing package were a critical part of completing this transaction and positioning our company for long-term growth.”
Steve Arntzen, CEO, Century Gaming, Inc.
PERSPECTIVES
Navigating the world
of private placements
The Pricoa Private Capital Guide to Private Placements.
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Pricoa Private Capital (‘PPC’) is a trading name of PGIM, Inc. (‘PGIM’), the principal asset management business of Prudential Financial, Inc. ('PFI'), and it is also a trading name of PGIM Private Capital Limited and PGIM Private Capital (Ireland) Limited. In the United Kingdom, information is issued by PGIM Private Capital Limited with registered office: Grand Buildings, 1-3 Strand, Trafalgar Square, London, WC2N 5HR. PGIM Private Capital Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) of the United Kingdom (Firm Reference Number 172071) and registered in England No. 1331817. In the European Economic Area (“EEA”), information is issued by PGIM Private Capital (Ireland) Limited with registered office: Pramerica Drive, Letterkenny Business and Technology Park, Letterkenny, Co Donegal, F92 W8CY, Ireland. PGIM Private Capital (Ireland) Limited is authorised and regulated by the Central Bank of Ireland and registered in Ireland under company number 635793 operating on the basis of a European passport. In certain EEA countries, information is, where permitted, presented by PGIM Private Capital Limited in reliance of provisions, exemptions or licenses available to PGIM Private Capital Limited under temporary permission arrangements following the exit of the United Kingdom from the European Union. These materials are issued by PGIM Private Capital Limited and/or PGIM Private Capital (Ireland) Limited to persons who are professional clients as defined  under the rules of the FCA and/or to persons who are professional clients as defined in the relevant local implementation of Directive 2014/65/EU (MiFID II).