Private placement agent
Encyclopedia
Private placement agent or placement agent is a firm assisting either funds managers in the alternative asset class (e.g. private equity
, infrastructure
, real estate
, hedge funds) or entrepreneurs/private companies (e.g. start-ups, growth capital
companies) seeking to raise private financing through a so-called private placement
.
Within the context of private companies, placement agents typically focus on raising the following source of financing:
The placement agent acts as a intermediary between those seeking to raise money and various investors who may be interested in investing in the company looking to raise funds. However, they are typically mandated by the fund managers
. A few placement agents are structured as groups within large investment banking
firms (e.g., Credit Suisse
, Greenhill & Co.
, Lazard
, UBS Investment Bank
) and more frequently as separate boutique investment banks (e.g. Atlantic-Pacific Capital
, Campbell Lutyens
, Probitas Partners
, Venturi Capital Advisors, Sixpoint Partners, Triago
, Touchstone Group), sometimes captive to an Alternative Asset
management group or specialist fund marketer (e.g. Brookfield Asset Management, MVision, Hedgeforce or Park Hill
).
Placement agents will regularly seek to raise capital from a variety of institutional investor
s (e.g., pension fund
s, insurance companies, endowments
, fund of funds
, Sovereign wealth fund
s) as well as family offices and high net worth individual
s. Some placement agents have an exclusive focus on a particular type of institutional investor
(e.g. US Pension Advisors for corporate and public pension fund
s).
Placement agents are most often compensated through fee arrangements based on on the amount of money raised and supported by the fund or company they are acting representing.
Private equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
, infrastructure
Infrastructure
Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...
, real estate
Real estate
In general use, esp. North American, 'real estate' is taken to mean "Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water; immovable property of this nature; an interest vested in this; an item of real property; buildings or...
, hedge funds) or entrepreneurs/private companies (e.g. start-ups, growth capital
Growth capital
Growth capital is a type of private equity investment, most often a minority investment, in relatively mature companies that are looking for capital to expand or restructure operations, enter new markets or finance a significant acquisition without a change of control of the business.Companies...
companies) seeking to raise private financing through a so-called private placement
Private placement
Private placement is a funding round of securities which are sold without an initial public offering, usually to a small number of chosen private investors...
.
Functions
Within the context of funds managers, placement agents can serve several functions:- Raise investor commitments to new private equity fundPrivate equity fundA private equity fund is a collective investment scheme used for making investments in various equity securities according to one of the investment strategies associated with private equity....
s - which might include targeting specific investor all the way down to a full service (advisory and marketing services) - Other services such as: strategic advisory or secondary market salesPrivate equity secondary marketIn finance, the private equity secondary market refers to the buying and selling of pre-existing investor commitments to private equity and other alternative investment funds....
of investors' private equityPrivate equityPrivate equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
funds interests for those Placement Agents with a dedicated secondary marketSecondary marketThe page applies to the finanical term; For the merchandising concept, see Aftermarket .The secondary market, also called aftermarket, is the financial market where previously issued securities and financial instruments such as stock, bonds, options, and futures are bought and sold....
advisory practice.
Within the context of private companies, placement agents typically focus on raising the following source of financing:
- EquityEquity (finance)In accounting and finance, equity is the residual claim or interest of the most junior class of investors in assets, after all liabilities are paid. If liability exceeds assets, negative equity exists...
financing for start-ups and growth companies - Mezzanine capitalMezzanine capitalMezzanine capital, in finance, refers to a subordinated debt or preferred equity instrument that represents a claim on a company's assets which is senior only to that of the common shares...
- Specialist financing such as Government loans
The placement agent acts as a intermediary between those seeking to raise money and various investors who may be interested in investing in the company looking to raise funds. However, they are typically mandated by the fund managers
Private equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
. A few placement agents are structured as groups within large investment banking
Investment banking
An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities...
firms (e.g., Credit Suisse
Credit Suisse
The Credit Suisse Group AG is a Swiss multinational financial services company headquartered in Zurich, with more than 250 branches in Switzerland and operations in more than 50 countries.-History:...
, Greenhill & Co.
Greenhill & Co.
Greenhill & Co., Inc. is a leading independent investment bank focused on providing financial advice on significant mergers, acquisitions, restructurings, financings and capital raisings to corporations, partnerships, institutions and governments. The firm made $298.6m in sales in 2009, with a...
, Lazard
Lazard
Lazard Ltd is the parent company of Lazard Group LLC, a global, independent investment bank with approximately 2,300 employees in 42 cities across 27 countries throughout Europe, North America, Asia, Australia, Central and South America...
, UBS Investment Bank
UBS AG
UBS AG is a Swiss global financial services company headquartered in Basel and Zürich, Switzerland, which provides investment banking, asset management, and wealth management services for private, corporate, and institutional clients worldwide, as well as retail clients in Switzerland...
) and more frequently as separate boutique investment banks (e.g. Atlantic-Pacific Capital
Atlantic-Pacific Capital
Atlantic-Pacific Capital is a leading independently-owned placement agent. APC has established relationships with a network of institutional investors in North America, Europe, the Middle East, Australasia, and the emerging markets to which it markets private equity funds.Founded in 1995, APC has...
, Campbell Lutyens
Campbell Lutyens
Campbell Lutyens is an independent private equity advisory firm exclusively focused on primary fundraising and secondary transactions in the private equity and infrastructure markets...
, Probitas Partners
Probitas Partners
Probitas Partners is a global investment bank focused on raising capital as a placement agent for private equity fund sponsors as well as providing portfolio management and liquidity solutions, through the private equity secondary market, for investors in private equity. The firm operates through...
, Venturi Capital Advisors, Sixpoint Partners, Triago
Triago
Triago is a leading global placement agent, specializing in raising capital for private equity investment firms from a range of institutional investors...
, Touchstone Group), sometimes captive to an Alternative Asset
Alternative asset
An alternative asset is a newer type of asset that has not been traditionally considered part of an investment portfolio. Historically, examples include real estate, commodities, as well as rare coins and stamps, artwork or trading cards...
management group or specialist fund marketer (e.g. Brookfield Asset Management, MVision, Hedgeforce or Park Hill
Park Hill
Park Hill is a council housing estate in Sheffield, South Yorkshire, England. It was built between 1957 and 1961, and in 1998 was given Grade II* listed building status, the largest listed building in Europe...
).
Placement agents will regularly seek to raise capital from a variety of institutional investor
Institutional investor
Institutional investors are organizations which pool large sums of money and invest those sums in securities, real property and other investment assets...
s (e.g., pension fund
Pension fund
A pension fund is any plan, fund, or scheme which provides retirement income.Pension funds are important shareholders of listed and private companies. They are especially important to the stock market where large institutional investors dominate. The largest 300 pension funds collectively hold...
s, insurance companies, endowments
Financial endowment
A financial endowment is a transfer of money or property donated to an institution. The total value of an institution's investments is often referred to as the institution's endowment and is typically organized as a public charity, private foundation, or trust....
, fund of funds
Fund of funds
A "fund of funds" is an investment strategy of holding a portfolio of other investment funds rather than investing directly in shares, bonds or other securities. This type of investing is often referred to as multi-manager investment...
, Sovereign wealth fund
Sovereign wealth fund
A sovereign wealth fund is a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments. Sovereign wealth funds invest globally. Some of them have grabbed attention making bad investments in several Wall Street financial...
s) as well as family offices and high net worth individual
High net worth individual
A high-net-worth individual is a person with a high net worth. In the private banking business, these individuals typically are defined as having investable assets in excess of US$1 million. As explained below, the U.S...
s. Some placement agents have an exclusive focus on a particular type of institutional investor
Institutional investor
Institutional investors are organizations which pool large sums of money and invest those sums in securities, real property and other investment assets...
(e.g. US Pension Advisors for corporate and public pension fund
Pension fund
A pension fund is any plan, fund, or scheme which provides retirement income.Pension funds are important shareholders of listed and private companies. They are especially important to the stock market where large institutional investors dominate. The largest 300 pension funds collectively hold...
s).
Placement agents are most often compensated through fee arrangements based on on the amount of money raised and supported by the fund or company they are acting representing.