Investment banks may sell restricted securities to large investors with over $100 million in assets (called Qualified Institutional Buyers or QIBs) based on Rule 144A. This is a private, low-key transaction that is not advertised like an IPO. There is no management roadshow to promote the issuer. Most of the times, they are done within a short timeframe. When these transactions occur, the sellside firm first must affirm that the buyers are QIBs.
These securities are not registered with the SEC and do not have to provide a full prospectus to the buyers. Instead, an offering memorandum is prepared. This document has a description of the issuer's business, financial statements and management's analysis of the most recent results.
A large number of these transactions are done for preferred convertible bonds and for ADRs (American Depository Receipts) or GDRs (Global Depository Receipts). This is an method for non-US companies to access US capital markets without having to submit to US disclosure laws.
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