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Private placement agents help clients, including institutional investors and corporations, raise money by identifying private funding opportunities and seeking financial commitments from investors. They must have deep relationships with institutional investors and be able to match investment funds to suitable potential investors. The more services a private placement agent offers, the more business they are likely to generate.
Raising money in the capital market can be more effective with the right support. A private placement agent is hired to identify private funding opportunities for clients. Often these clients are institutional investors such as private equity or real estate companies. A private placement agent can also help corporations, including start-ups looking to raise money for growth or to continue operations. Once investors are identified, a placement agent seeks to obtain a financial commitment from them and, if any promises have already been made, the agent may attempt to increase the value of that investment.
Private channels occur throughout the private equity arena. A private equity professional raises money for an investment portfolio with a specific strategy in mind for the direction of that fund. A private placement agent may be hired to help the company raise money by locating investors for a specific fund. He or she must have deep relationships with institutional investors, including pension funds, endowments and financial services companies, for example. Agents should help private equity managers set goals linked to the investment fund so that logical steps are taken to meet those expectations, such as trying to close a fund to new investments by a certain date.
To be effective, a private placement agent must be comfortable marketing a client’s investment product to other institutional investors. This implies knowing which investment funds would be most appropriate for which investors. Certain mutual funds may be better suited to insurance companies, for example, while others may attract investment capital from wealthy companies and individuals. By matching mutual funds to only the most suitable potential investors, a private placement agent is valuing a client’s time, avoiding unproductive conversations. Ideally, a placement agent can return to an investor when a private equity fund adds to a subsequent investment portfolio in the future.
For a private corporation, a placement agent would seek to attract capital from venture capital firms that invest in start-ups. An agent can also help a new business raise mezzanine capital, which can be either debt or equity. The money can be used to fund operations, expand or strengthen a balance sheet.
The greater the breadth of services a private placement agent offers, the more business that professional is likely to generate. For example, a placement agent with experience on all continents offers investor clients greater exposure to global capital. A professional with experience raising funds for real estate funds, private equity and private corporations can benefit most through changing economic cycles, when asset classes come and go in favor.
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