Fundraising Services in Singapore: A Closer Look at Private Placements
There are many fundraising services in Singapore that your company can avail. Whatever it is, make sure that it suits your business plans and preference.
One of these is through private placement or non-public offering. Under this scheme, your company sells corporate bonds, stocks or securities to private investors and not on an open market. These investors are usually insurance firms, mutual funds, pension funds and individuals with high net worth.
It is seen as an alternative option to initial public offering for companies looking to accumulate additional funding.
Private placements are common for startup companies so they can facilitate business growth while not opting to go public.
Why You Should Raise Funds Through Private Placements
It is understandable to always weigh the pros and cons of every business decision. Here are the advantages of private placements as fundraising services in Singapore.
- This can allow you to choose your preferred investors. Having this opportunity means you can onboard to your business the investors who share the same objectives with you for your business. They can also prove the needed advice, assistance, and financings.
- Your company will stay private because you will not be reaching out to the investing public.
- Private placements provide flexibility in the amount of money to be raised, as well as the kind of financing. You can combine both capital-raising through bond selling and equity securities.
- Investors are usually more patient, allowing you to have a longer period to make return on the investment.
- Private placements are less costly and time-consuming. You do not need to maintain a public float as well.
- It is a quicker way of obtaining funds than going through an initial public offering.
Yes, there are many upsides to private placements and control over your company is probably one of the selling points.
Shortcomings of Private Placements
This is not to discourage your company. But it is necessary to know what lies ahead should you make the decision of raising funds through private placements. Knowing these things can actually help you lay out your plans better. It is better to know so you can act on it immediately.
- Your company has a smaller market for bonds and shares because you are only choosing private investors. This can have a long-term impact on your business value.
- You might have a hard time convincing potential investors. They may not even meet the amount of investment your seeking in the first place.
- You might have to place a significant discount on your offered bonds or shares to compensate for the risk your investors are taking in.
Do not be intimidated by the scenarios mentioned above. You might be having more benefits than disadvantages after reaping the rewards of private placements.
Preparing for Private Placements
Before you proceed with these fundraising services in Singapore, you must be prepared. Make sure to follow the requirements needed.
- You must have a sound business plan.
- Accomplish your private placement memorandum. This discusses the details about your investment and your business.
- Hire a lawyer to conduct your private placements.
Always remember that going public is not the sole choice to acquire your desired funding. Private placements are a viable option, especially if you are just starting out.
The dedicated team, 3E Accounting, is more than happy to assist the Chinese business consultants and others on the future business venture. Contact them today.