A private placement is an offer by a company to private investors to subscribe to its securities (such as equity and debentures) u/s 42 of the Companies Act, 2013. The invitation is made through issue of offer letter to the investors. Investors include large banks, mutual funds, insurance companies and pension funds. The allotment offer can be made up to 200 persons or less excluding qualified institutional buyers (QIBs) and securities issued to employees by way of ESOPs. Payment for subscription must be paid through cheque, demand draft or other banking channels. Private placement does not include rights issue.