Placing
Placing is where selected institutions are phoned by a firm’s advising investment bank and offered blocks of shares.
When a company wants to raise new money from shareholders it has a choice about how it goes about doing so. One option is an offer for sale to all potential shareholders, institutional and private. This takes time to organise as the regulations are quite strict and there are potentially many application forms to process. There is also some uncertainty about whether retail investors will commit to buy new shares. So unless a firm has a good reason to do it a football club wanting to offer shares to fans, for example most firms go for a placing instead.
This is where selected institutions are phoned by a firm's advising investment bank and offered blocks of shares they are quite literally placed'. This is usually a quicker and cheaper way to raise the same funds. As part of a placing, the advising bank will often organise a roadshow', where it visits the biggest potential investors (pension funds, for example) to market the new shares.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Barclays warns of significant rise in social media investment scams
Investment scam victims are losing an average £14k, with 61% of those falling for one over social media. Here's how to spot one and keep your money safe
By Oojal Dhanjal Published
-
Over a thousand savings accounts now offer inflation-busting rates – how long will they stick around?
The rate of UK inflation slowed again in March, boosting the opportunity for savers to earn real returns on cash in the bank. But you will need to act fast to secure the best deals.
By Katie Williams Published