Placing of Securities
That are unquoted is known as private placing. The securities are usually in small companies but these may occasionally be in large companies. When the securities to be placed are newly quoted, the method is officially known as stock exchange placing.
The main advantage of placing, as a method of issuing new securities, is its relative cheapness. This is partly because many of the items of expenses in public issue and offer for sale methods like underwriting commission, expense relating to applications and allotment of shares, and so on are avoided. Moreover, the stock exchange requirement, contents of the prospectus and its advertisement are less onerous in the case of placing.
Its weakness arises from the point of view of distribution of securities. Its the security offered only to a select group of investors, it may lead to the concentration of shares into a hands, who may be in rimes of hectic dealings in such shares.