Definition of Private Placement

A private placement is a direct offering of securities to a limited number of sophisticated institutional investors. Investors in privately placed securities include insurance companies, pension funds, mezzanine funds, equity funds and trusts. Securities issued as private placements, including debt, equity or hybrid securities, are exempt from from public registration under the Securities Act of 1933.

Source: Wikipedia.com

Raising of capital via private rather than public placement. The result is the sale of securities to a relatively small number of investors. Private placements do not have to be registered with organizations such as the SEC because no public offering is involved.

Source: Investopedia.com