A private placement agent or placement agent is a firm assisting fund managers in the alternative asset class (e.g.,

private equity In the field of finance, the term private equity (PE) refers to investment funds, usually limited partnerships (LP), which buy and restructure financially weak companies that produce goods and provide services. A private-equity fund is both a t ...

,Buyout firms race to spend cash piles
Financial News, 21 March 2011 infrastructure,

real estate Real estate is 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 (also) an item of real property, (more general ...

hedge funds A hedge fund is a pooled investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio-construction, and risk management techniques in an attempt to improve performance, such as sho ...

, and

venture capital Venture capital (often abbreviated as VC) is a form of private equity financing that is provided by venture capital firms or funds to start-up company, startups, early-stage, and emerging companies that have been deemed to have high growth poten ...

) and entrepreneurs/private companies (e.g., start-ups and

growth capital Growth capital (also called expansion capital and growth equity) is a type of private equity investment, usually a minority investment, in relatively mature companies that are looking for capital to expand or restructure operations, enter new mark ...

companies) seeking to raise private financing through a so-called private placement.

Background

The placement agent acts as an intermediary between those seeking to raise money and those who may be interested in investing. They are typically mandated by fund managers. A few placement agents are structured as groups within large investment banking firms, but more frequently as separate boutique investment banks, sometimes captive to an Alternative Asset management group or specialist fund marketer. Placement agents will often seek to raise capital from a variety of institutional investors (e.g., pension funds,

insurance companies Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...

, endowments, funds of funds, and

sovereign wealth fund A sovereign wealth fund (SWF), sovereign investment fund, or social wealth fund is a state-owned investment fund that invests in real and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as ...

s) as well as

family offices A family office is a privately held company that handles investment management and wealth management for a wealthy family, generally one with at least $50-$100 million in investable assets, with the goal being to effectively grow and transfer ...

and high-net-worth individuals. Some placement agents have an exclusive focus on a particular type of institutional investor such as US pension advisors for corporate and public pension funds. Placement agents are most often compensated through fees based on the amount of money raised (success fee) or supported by the fund or company they are actively representing (retainer fee).

Functions

Within the context of

fund manager Fund may refer to: * Funding is the act of providing resources, usually in form of money, or other values such as effort or time, for a project, a person, a business, or any other private or public institution ** The process of soliciting and gath ...

s, placement agents can serve several functions: *Raise investor commitments to new private equity funds – which might include targeting specific investors all the way down to a full service (advisory and marketing services). *Other services such as: **Strategic advisory **Marketing: creating marketing materials such as investor decks, coordinating roadshows and meetings with investors, answering due diligence questionnaires (DDQs) and request for proposals (RFPs) ** secondary market sales of investors'

funds interests for placement agents with a dedicated secondary market advisory practice Within the context of private companies, placement agents typically focus on raising the following types of financing: * Equity financing for start-ups and

growth companies In finance, a growth stock is a stock of a company that generates substantial and sustainable positive cash flow and whose revenues and earnings are expected to increase at a faster rate than the average company within the same industry. A growth c ...

* Mezzanine capital * Specialist financing such as government loans

Bibliography

*Wilmerding, Alex. ''Deal Terms''

References

{{private equity and venture capital Private equity Venture capital