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Placing
When a company has a new issue of its shares, either as part of an IPO (flotation) or after listing, it has two choices. It can have an 'offer for sale' to the public at large or it can 'place' the shares with institutions.In the 1980s there were lots of high profile new issues involving offers for sale, and some of them were done as tender offers where investors effectively had to bid for the shares.In recent years, offers for sale have been thin on the ground, with companies preferring to place shares with favoured institutions. This is partly because the costs of a placing are far lower than an offer for sale, and partly it is because in 1996 the Stock Exchange scrapped its rule requiring that new issues worth more than £50m should offer a proportion to the public.
Similar MatchesVendor placingVendor placing
An arrangement in which the vendor (seller) of a business who receives shares in the acquiring company as part of the deal immediately sells them on to an institutional investor.The point of this is that if the vendor sold the shares on the open market it would depress the share price, which would be bad both for the vendor and for the company. By selling a large block to an institution the price remains stable.The vendor gets what he really wants (cash), the acquiring company is able to pay for its acquisition the way it wants (shares) and the institutional investor gets shares in a company that it likes at a price that will invariably be below the market price.
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