After publishing our articles on Maple Leaf's private placement financing deal and Aphria's private placement in Tetra Bio-Pharma, we received a question from a few readers: "What is a private placement?"
Just as a public cannabis company can raise capital by doing a public issue or public offering, a company can also choose to raise capital through a private placement. Where as public issues involve a company making shares available for sale on the open markets, private placements involve a company making shares available for sale to a small and selective group of investors. These investors can be investment banks, investment funds and more.
Private placements are one more way that a cannabis company can raise capital for expansion and operations. For a more in-depth explanation on private placements, see Investopedia's definition of a private placement here.