The Sydney Morning Herald This was published 7 years ago Capital raisings: the good, the bad and the ugly By Nathan Bell July 5, 2013 — 11.22am
The ugly The worst option for most shareholders is a placement. This is an issue of shares to one or more large shareholders (existing or otherwise). As investment banks typically control which clients receive stock — as well as the issue price — it's the least transparent of all the capital raising methods.However it is fast, which explains its popularity. Hundreds of millions of dollars can be raised in little more than an afternoon — particularly useful when making acquisitions or takeovers, or repaying debt you shouldn't have taken on in the first place.But placements are dilutionary to small shareholders. Institutions get to buy new shares at a discount and small shareholders don't.
