What is a privileged subscription?

A privileged subscription refers to the marketing of a new security to a select group of investors. This process typically involves targeting specific investors who are considered more likely to invest or are viewed as more desirable for the issuer of the security. This targeted approach can help companies raise capital from strategic investors rather than making the offering available to the general public through a broader subscription.

By focusing on a select group, issuers can facilitate quicker and more efficient capital raises, as they can build relationships with these investors and cater offerings to their specific interests. This method contrasts with a public offering, where securities are made available to all investors and generally involves more regulatory scrutiny and disclosure requirements.

The concept of privileged subscription is crucial in understanding how companies manage their capital structure and investor relations, often ensuring that their securities are held by individuals or entities that can provide additional value beyond just financial investment.