sale of securities to a long-term institutional investor, such as a life insurance company or pension fund, without the use of underwriters, also known as a sale of loans, such as mortgages directly to an investor. The term also refers to private placement.
direct sale of securities to one or more professional investors. Such securities may or may not be registered with the Securities and Exchange Commission. They may be bonds, private issues of stock, limited partnership interests, mortgage-backed securities, venture capital investments, or other sophisticated instruments. These investments typically require large minimum purchases, often in the millions of dollars. Direct placements offer higher potential returns than many publicly offered securities, but also present more risk. Buyers of direct placements are large, sophisticated financial institutions including insurance companies, banks, mutual funds, foundations, and pension funds that are able to evaluate such offerings. Also called private placement.
security sold by the issuer of the security directly to the purchasing financial institution without the inclusion of the investment banker in this process. Insurance companies are frequent purchasers of securities in this way. Only the largest firms with the highest credit ratings are able to issue these types of securities. The issuer avoids the uncertainty of the market through these private negotiations.
