In a private placement, securities are sold to one or a few investors, generally institutional investors. The primary advantages of private placement are:
(a) Lower floatation costs
(b) Greater speed since shares will not have to go through the capital market authority (CMA)
The major disadvantage however is that the securities will not have been approved by CMA and therefore cannot be sold in stock exchange except to another large investor. Privately placed securities, therefore, lack liquidity.