A Private placement of shares is a common method of raising business capital. Through the offering and sales of equity shares, a business is able to raise the funding needed to achive further growth and expansion.
One may find Private placements from either private companies wishing to acquire a few select investors or from publicly traded companies as a secondary stock offering. In the first case it has minimal regulatory requirements and standards that it must abide by.
The investment does not require a prospectus, and quite often, detailed financial information is not disclosed. Hence a private investor, mainly high-net-worth individual, should undertake a proper due dilligence to reduce risks.