What are the types of private placements?
- Equity Private Placements
An Equity Private Placement is a transaction in which investors invest in the equity securities (e.g. common equity, preferred equity, etc) of a company.
- Debt Private Placements
A Debt Private Placement is a transaction in which investors invest in the debt securities (e.g. loan, bonds, debentures, etc) of a company.
- Equity-Linked Private Placements
An Equity-Linked Private Placement is a transaction in which investors invest in the hybrid securities of a company whose return is connected to an underlying equity security (e.g. convertible debt, convertible preferred, etc). These securities often carry a current interest rate or preferred dividend and may be convertible into common shares in specified circumstances.
Should I invest alone or in a group?
Potential investors who are new to private placement investing should consider investing alongside an experienced investor or as part of a group of investors or syndicate. This enables them to pool their finance and their skills to maximise their opportunities. By investing alongside others in a syndicate, investors will be spreading their monetary risk as syndication is a beneficial and proven model of investing. A syndicate normally comprises of at least three investors who are investing together.
How does syndication on a deal-by-deal basis work?
On an ad hoc basis, investors could form a syndicate around an opportunity. This happens when Azione presents selected investment propositions where investors can meet other investors with whom they could co-invest. Azione enables groups of investors to come together on a deal-by-deal basis according to their interest in a particular opportunity.
Normally, they would identify a lead investor who acts as the interface with the management team in co-ordinating the due diligence and agreeing the final negotiations and would then generally act for the syndicate in following the deal. All investors will sign the term sheet and other legal documents and subscribe to the shares as individual investors who are responsible for their own investment decisions.
How does creating a formal syndicate work?
If investors are investing regularly with fellow investors and are looking at investing together in different deals, Azione would enable them to set up a more formal syndicate structure and would advise on using standard investment documentation. We would also help with regulatory compliance and assist with facilitating legal advice.