What is a Private Investment?

We've all heard of companies that ‘go public’. But have you heard of companies that ‘go private’? 

Instead of filing a prospectus and raising capital on the publicly traded stock market, these businesses raise capital through an 'Offering Memorandum Exemption'. Canadians, like you and me, can invest in these private ‘units’ offered by licensed Dealing Representatives, such as myself.

​

Why invest privately? 

So, why invest in a private business instead of a publicly traded one? In these uncertain times, where public markets exhibit great volatility, you may find the stability of a private investment, comforting. 

Holding market value 

​

Private investments are often able to hold their market value based on the appraisal of the real estate, rather than on the market sentiment, as in the public market. You will, in most cases, need to hold the investment for a number of years. There is no ‘secondary market’ for privately purchased units. With a private real estate investment trust (REIT), for example, you may invest in a large fund that owns a pool of apartment buildings. 

During the 2008 market crash many publicly held funds and stocks lost share value. It often took several years for the publicly traded stocks to recover their value.

The unit price of privately held investments, such as a REIT, may have been less impacted. Even in 2020, and throughout the pandemic, many private investments with ‘R and D Securities’ continued to grow, adding value for their customers. 

Grow your investments 

​  

In the ‘R and D’ portfolio several of their privately held real estate pools have grown nicely. It is also possible to create income from investments. Distributions from those investments have continued. Those private investments, during the pandemic, spared clients from the volatility seen in the public market.

With a selection of investments from the ‘R and D’ portfolio it is possible to create an income stream, or have these investments reinvest the distributions automatically.

And many of the distributions may be treated as a return of capital, which may create a tax advantage for the investor. 

At ‘Rethink and Diversify Securities’ we offer a wide variety of private securities in many different sectors. These sectors include: real estate, industrial services, manufacturing, flow-through tax credits, lending, and other business segments of the Canadian marketplace.

Add a little ‘private wealth’ to benefit you with real growth and value in your portfolio.