Question

If a company were looking for capital by way of a private placement, where would it look for funds?

Short answer

A company may raise capital by way of a private placement through insurance companies, pension, and mutual funds.

Step-by-step solution

Private placement

Private placement refers to the approach adopted by companies in which they do not sell their stock in theopen market and trade with pre-selected investors

Sources of funds in private placement

Companies often raise capital in a private placement through insurance companies, pension funds, mutual funds, and wealthy investors.

Such sources fulfill the capital requirement of the companies, and companies save their time and money from open market trading.