A PPM is a document that outlines the terms and the agreement of a private securities offering. The three letters of PPM are interchangeable with the larger term private placement memorandum. When a private company want to issue securities, either in the form of debt such as bonds or notes, or in the form of equity like commons stock or units, a PPM should be written and given to investors. Our staff at Prospectus has been writing PPMs for more than 15 years and have participated in several thousand PPM project creations. Preparing a PPM for investment purposes is often required for regulatory purposes and the vast majority of investors simply will not take your project seriously without one. The PPM and the business plan are the two most important documents needed when raising capital. The business plan explains the business at hand while the PPM explains the securities being offered.
The PPM memo needs to discuss the risk factors and tax implications for the investors. The risks are important to list as this will add protection to the founders and help investors decide if they can tolerate such risks. The PPM should be viewed as a strategic position or opportunity as the issuer will be allowed to tell the story of the company to qualified investors. This should not be a missed opportunity.
Cayman Islands PPM
The PPM offering document is used when companies issue debt securities, such as notes or bonds, as well as equities, such as common shares, units, warrants and more.
Equity: When writing a PPM it is best to keep in mind what you will be offering investors. Various entities such as corporations or LLCs to hedge funds and other investment funds have their own equity structures. Each structure will have their own rules and threshold for giving away equity for capital. Some entities when issuing equity ownership do not grant voting power and therefore an investor would be a silent partner. All of these terms would be outlined in the PPM.
Debt: In terms of silent partnerships, debt issuance is most commonly like this. A debt security is essentially a promise from the issue to pay back their initial investment with a profit at a specific time. Within the PPM will be the debt issuance of securities terms, including the payment dates, interest and maturity dates, risk factor section, management team biographies, tax issues and more.
Whether you need an equity PPM written for a hedge fund or a corporation or an LLC, or a PPM for a debt offering of notes or convertible bonds, our team at Prospectus can assist.
Private Placement PPMs
Many refer to the offering document used to solict private investors a “PPM”. This term is used globally. The letters PPM are used for offshore hedge funds to onshore corporations. Aside from the PPM other common terms for a disclosure document is the private placement memorandum, prospectus, offering memorandum, offering circular and even investment memorandum.
The subscription agreement is the final section of a PPM and this contains both the investor questionnaire (for the company to qualify the investor) and the actual subscription agreement.The sub-agreement is the company’s contract for the investor. Once he/she agrees to the terms of the PPM then the investor would sign the subsciption agreement, which is an abbreivated version of what the PPM disclosed. Every PPM should contain a subscription agreement. Without the agreement contract within the PPM an investor cannot make a decision to invest. Thus, precious time will be lost.
Our team of consultants and lawyers are happy to assist with your Cayman Islands PPM. Whether you need a debt PPM for selling notes or bonds, or an equity PPM for selling stock, shares or units, our staff is more than happy to speak or meet at any of our worldwide locations.