Private placement

A private placement is a sale of stock or share or bond to pre determine invester or institution rather than publicly on open market.

It is an alternative to an IPO for a company seeking to raise capital for expansion.

In India, private placement refers to the process of issuing securities to a select group of investors, rather than to the public at large. Private placement is governed by the Securities and Exchange Board of India (SEBI) under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations) and Companies Act, 2013.

The ICDR regulations lays down the rules and procedures for private placement of securities in India, including the eligibility criteria for companies to raise funds through private placement, the process for issuing securities, and the disclosures and reporting requirements that companies must comply with.

Under Indian law, a private placement can be made through the issuance of various securities, including equity shares, preference shares, debentures and bonds. Private placement can be made through different routes as well such as Qualified Institutional Placement(QIP), Rights Issue, Foreign Currency Convertible Bonds(FCCB), American Depository Receipts(ADR) or Global Depository Receipts (GDR).

To make a private placement, a company must file an offer letter with SEBI and comply with the necessary disclosures and filing requirements. The offer letter must include details of the securities being offered, the minimum and maximum number of securities to be issued, the issue price, and the terms and conditions of the issue. Also, the company needs to comply with KYC and other regulatory requirement of the investors.

It's worth noting that private placement is a relatively complex process and that it's important to seek the advice of a professional financial advisor and legal counsel to ensure compliance with all legal requirements and to make sure the process goes smoothly.