debt security placed directly with a limited group of investors by institutions operating on the Euromarket – for their own refinancing or – on behalf of customers. – In Germany, an offer to a small circle of customers (institutional investors; institutional investors such as, above all, capital management companies and insurance companies) for the purchase of securities and, in particular, bonds for which no stock exchange listing is envisaged (an issue that is offered to a single or a few investors as opposed to being publicly offered). In this way, the issue can be placed very quickly and at low cost, because the issuing burdens for the preparation of the prospectus and the stock exchange listing are omitted (private placement often is chosen when the issuer wants to avoid complexities as regulation or information disclosure of a public offering). – In the broadest sense: a limited number of investors (institutional investors: banks, capital management companies, insurance companies) are made an offer to acquire securities. – The spectrum of investment opportunities to be offered in the context of such an offering is much broader and more attractive than a securities issue via the stock exchange and covers the entire range of financial instruments, including the many forms of mezzanine capital. In particular, the over-the-counter financial market can offer and distribute securities-free – and thus less expensive – non-voting equity investments (long-term equity investments), and in some cases with considerable tax advantages for companies and investors. – Statistically, the share of private placements has been rising steadily since 2000 compared with the issuance of bonds via the stock exchange; however, there are only estimates and, to date, no precise figures on the volume of transactions. – See commercial paper, end investor, equity kicker, first-loss tranche, catastrophe bonds, credit derivative, credit extension, medium-term notes, originator, paper, private equity financing, prospectus requirement, qualified investor registry, retrocession, venture capital, single hedge fund, title, terror paper, true sale securitization, securitization. Distribution, public, weather derivative. – See BaFin Annual Report 2004, p. 183 f. (conditions for a permit to launch hedge funds in general and distribution by way of private placement), Deutsche Bundesbank Monthly Report of July 2008, p. 36 (advantages and disadvantages of privately placed bonds).
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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