What Is a Pre-IPO Placement?

Private placement of substantial blocks of shares before the stock is listed on a public market is known as a pre-initial public offering (IPO). Private equity companies, hedge funds, and other institutions that are ready to purchase substantial shares in a company are generally the buyers. Buyers in a pre-IPO placement typically receive a discount from the price mentioned in the prospectus for the IPO due to the scale of the investments being made and the risks involved.