Private Placements ...

Companies are going for private placements: Airasia, Snichi, Kencana, RCE, AXIS REIT, SilverBird. Latest is Unisem..

In a private placement, shares are issued to a selected group of people at a particular price.

Generally, they observed that investors’ risk appetite had improved (Aug 2009 - Sept 2009) compared with six months ago (March 2009) in view of the better economic conditions. It is always good to do placement when share prices are high, companies could raise more fund with the same number of shares.

Earnings dilution aside. Companies are taking advantage of the bullish sentiment, not forgetting that some companies may still face difficulties in getting loans.

The problem with this method is that if the traded price of many companies are at very low levels). Existing shareholders will be extremely unhappy if a private placement is done at low prices and their shareholdings get diluted. It would be like daylight robbery.