LESSON 7 OF 16 · 2 MIN
Placings and fundraises
IN SHORTWhen a company sells new shares to raise money, existing holders own a smaller slice. Placings are often priced at a discount, which can pull the share price down.
Companies raise money by selling new shares. A placing sells them to investment funds, often overnight. A retail offer or open offer lets ordinary shareholders join in.
KEY POINTNew shares dilute existing holders: each share is a smaller piece of a bigger company.
Placings are usually priced at a discount to the last price, so the share price often drifts towards the placing price. What matters next is what the money is for: growth that adds value, or simply staying afloat?
- Placing price versus market price: how big is the discount?
- Size: how many new shares compared with those already in issue?
- Use of funds: growth, paying debt, or covering losses?
Try it: Ask Stock Chat to explain a recent fundraise in plain English (members).
Open Stock ChatEducation only. TradingFloor AI does not give investment advice. Prices can fall as well as rise and you may get back less than you invest.