Private placement

Such an issue is aimed at a specific investor, company, or group of investors. In order for a private placement to be carried out, it must be approved by the board. This is because it deviates from the main rule of shareholder legislation, which states that a rights issue must first and foremost be carried out.


A private placement must therefore be approved on a sustainable basis. There are many reasons why companies still carry out private placements. This is often because it can be completed significantly faster than with a regular rights issue, which can be very good for companies that need capital quickly.


It may also be that the company wishes to direct the issue towards a possible partner, a large company or institutions in order to secure long-term, and solid owners as the largest owners of the company.


An example where it can often be very lucrative with a private placement is in industries such as healthcare, biotech and research. Here, small companies can issue (print) 10/20% new shares to a large player in the industry who may be a partner who cooperates with the company in one way or another. Such an action does not have to be a negative thing for existing shareholders, even if they are a little diluted.  You then get a lot of money from a solid partner or institution that has faith in the company and can contribute with a lot of positive publicity and experience to the company.

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