Private placement agent

A Private placement agent or placement agent is a firm assisting either funds managers in the alternative asset class (e.g. private equity,^[1] 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.

Functions

Within the context of funds managers, placement agents can serve several functions:

• Raise investor commitments to new private equity funds - 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 sales of investors' private equity funds interests for those Placement Agents with a dedicated secondary market advisory practice.

Within the context of private companies, placement agents typically focus on raising the following source of financing:

• Equity financing for start-ups and growth companies
• Mezzanine capital
• Specialist financing such as Government loans

The placement agent acts as an 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., HSBC, Credit Suisse, Lazard, UBS Investment Bank) and more frequently as separate boutique investment banks (e.g. Asante Capital, Campbell Lutyens, DC Placement Advisors, Eaton Partners, Probitas Partners, Rede Partners or Triago), sometimes captive to an Alternative Asset management group or specialist fund marketer.

Placement agents will regularly seek to raise capital from a variety of institutional investors (e.g., pension funds, insurance companies, endowments, fund of funds, Sovereign wealth funds) as well as family offices and high-net-worth individuals. Some placement agents have an exclusive focus on a particular type of institutional investor (e.g. US Pension Advisors for corporate and public pension funds).

Placement agents are most often compensated through fee arrangements based on the amount of money raised and supported by the fund or company they are actively representing.

Bibliography

• Wilmerding, Alex. Deal Terms ISBN 1-58762-208-4

References

Private equity and venture capital Basic investment types Buyout Venture Mezzanine Growth Secondaries Equity co-investment History History of private equity and venture capital Early history of private equity Private equity in the 1980s Private equity in the 1990s Private equity in the 2000s Terms and concepts Buyout Financial sponsor Management buyout Divisional buyout Buy–sell agreement Leveraged recapitalization Dividend recapitalization Venture Angel investor Business incubator Post-money valuation Pre-money valuation Seed money Startup company Venture capital financing Venture debt Venture round Structure Private equity firms and funds Limited partnership Limited liability company Carried interest Management fee Publicly traded private equity Business Development Company Venture capital trust Private investment in public equity (PIPE) Pledge fund Investors Corporations Institutional investors Pension funds Insurance companies Fund of funds Endowments Foundations Investment banks Merchant banks Commercial banks High-net-worth individuals Family offices Sovereign wealth funds Crowdfunding Related financial terms AUM Cap table Capital call Capital commitment Capital structure Distribution waterfall EBITDA Envy ratio High-yield debt IPO IRR Leverage Liquidation preference M&A PME Taxation of private equity and hedge funds Undercapitalization Vintage year Private equity and venture capital investors Private equity firms Venture capital firms Angel investors Portfolio companies