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.

Recommended

Resource curse
Glossary

Resource curse

The term “resource curse” refers to the observation that countries with abundant natural resources also tend to be less economically developed than th…
14 Jan 2021
Balance of payments
Glossary

Balance of payments

The balance of payments refers to the accounts that sum up a country's financial position relative to other countries.
8 Jan 2021
Yield-curve control
Glossary

Yield-curve control

Yield-curve control is when a central bank aims to control long-term interest rates by pledging to buy (or sell) as many long-term bonds as needed to …
25 Dec 2020
Intangible assets
Glossary

Intangible assets

An intangible asset is anything that a company owns that isn’t physical.
25 Sep 2020

Most Popular

The FTSE 100 is set for a makeover with an influx of new tech stocks
UK stockmarkets

The FTSE 100 is set for a makeover with an influx of new tech stocks

The FTSE 100 – the dullest index in the world – is about to reinvent itself as a host of new firms list on the market. The change is long overdue, say…
24 Jan 2021
Think Tesla is a bubble? This might be the best way to bet on it bursting
Oil

Think Tesla is a bubble? This might be the best way to bet on it bursting

The huge rise in Tesla’s share price means that, by market value, it’s now the sixth-largest company in the US and and the world’s biggest car-maker. …
25 Jan 2021
Why we won’t see a house-price crash in 2021
House prices

Why we won’t see a house-price crash in 2021

Lockdown sent house prices berserk as cooped up home-workers fled for bigger properties in the country. And while they won’t rise quite as much this y…
18 Jan 2021