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What are share issues and placements?

Wednesday 23rd January 2002

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Q: What are share issues and placements? Where can I find information on them?

A: A share issue is when a company raises money (also called capital or funds) either by offering shares to the public (often called an 'IPO' - Initial Public Offering) or by making a 'placement'.

Almost anyone can buy shares in an IPO, as long as you meet all the requirements set out in the prospectus or investment statement.

Sometimes a company may also make what is called a 'placement' of shares. Placements are done privately and usually to institutions or very wealthy individuals. The company issuing the shares is also trying to raise money but does so by placing a parcel of the company's shares with fund managers or insurance companies for a fixed price.

Most people don't find out about a share placement until after if happens. Small individual shareholders are not included in placements and will only find out about them in the company's annual report or the placement announcement the company provides to the NZSE. Share issues are usually available on broker's websites and the pros and cons of various upcoming issues are regularly discussed the ShareChat Forum.

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