Difference between Public offering and Private Placement
Methods of Issuing Securities
Public Offering is one of the methods of selling securities to the general public where there are a large number of investors. Private Placement is one of the methods of selling securities directly or privately to a few/a group of individual investors or institutional investors.
Difference between Public offering and Private Placement are as follows:
S.No. |
Public Offering |
Private Placement |
| 1. | Public Offering is one of the methods of selling securities to the general public where there are a large number of investors. | Private Placement is one of the methods of selling securities directly or privately to a few/a group of individual investors or institutional investors. |
| 2. | Generally, large scale company raises fund through public offering. | Generally,small scale company raises fund through private placement. |
| 3. | In case of public offering,investment banker acts as a middleman which hiring together suppliers and users of long term fund in capital market. | In case of private placement,there is no middleman as it is the direct negotiation between issuing company and the investors. |
| 4. | Under public offering, floatation cost is included as there is the need of underwriter. | Under private placement, floatation cost is excluded as there is no need of underwriter. |
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