Private Placement

gbear_3

Hi,

I've been offered a chance to buy some shares in a company as a private placement. The idea is that I get them at less than list price and then sell them after listing for a small profit. Does anybody know much about this sort of deal or has any advice or wisdom?

Thanks

Gbear

klondyke

There is nothing wrong in principle with a private placement, provided the offer is through a reputable broker and you do your homework on the shares involved. ie don't just listen to the hype the broker gives you, but make your own judgement.

Generally, (genuine) private placements are made for shares of small companies, not big enough to go through the full flotation palaver. They could be a huge success - or an equally huge disaster.

Ask yourself - why you? Are you on excellent terms with the broker - or does he think you're a sucker? (He will be on commission to place them - no problem if they are desirable and hard work if not!)

I used to occasionally take up private placement offers, through a broker I knew personally, provided I knew I could sell quickly if necessary. (Not always the case if not listed on the main market.)