Different of IPO and Private placement
Initial Public Offering
An initial public offering, or IPO, is a private company's first sale of stock to the public. Often, IPOs are offered by smaller and younger companies that are looking to grow rapidly. That means IPOs are a risky investment, because the company has a limited history and the stock's future value is uncertain.
Private Placement
A private placement is a non-public offering that is typically exempt from the usual requirements of registration with the U.S. Securities and Exchange Commission. Private placements usually involve sales of securities to small groups of institutional and accredited investors. Banks, mutual funds, insurance companies and pension funds are most likely to offer private placements.
Differences
A company issuing a private placement has the advantage of not having to pay expensive underwriting fees that are common with IPOs. Also, private placements are not traded on public exchanges, but in general their rates of return are potentially higher than those of IPOs.
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