What’s a Private Investment

We've all heard of companies who "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 their capital using an Offering Memorandum Exemption and ordinary Canadians, like you and me, can invest in these private "units" offered by licensed Dealing Representatives such as myself.

​

So, why would you want to invest in a private business versus a publicly traded one? There is no "secondary market" for these privately purchased units and you will in most cases need to hold the investment for one, two, three or more years. But in these uncertain times, where public markets exhibit great volatility, you may find the stability of the private investment, comforting. 

​

Take for example, a private real estate investment trust (REIT). You (or I) invest in units of a large fund which owns the apartments. When the public markets crashed in 2008, the public examples of a REIT which were trading on the stock markets, lost share value in approximately the same manner all publicly traded stocks did in that moment. In some cases, it took several years for these public stocks to recover their value. However, the unit price of the privately held REIT's were not impacted by the dip in the public markets. As we have seen during 2020, several of our privately held real estate pools have grown nicely, adding real value to our investors. Distributions as well have continued for those who wish income from their investments. Being “Private” in 2020 has spared our clients from the volatility that we have seen in the publicly traded markets. 

​

At Rethink and Diversify Securities we offer a wide variety of private securities in many different sectors of real estate, Industrial Services, manufacturing and many other business segments of the Canadian Marketplace. Let’s see if adding a little “Private Wealth” to your portfolio can add value and real growth for you!