What is the difference between the two?
1.One of them issues debt and the other issues equity capital.
- the one ithat raises dividend capital is an establised company that is being leveraged up to allow the owners to recoup their investment in a shorter time. The one that does private placement is usually a less established firm that is a start up or seed company , and cannot afford to comply with sec and exchange regulations yet.
A dividend recapitalization is paid out to owners so they can pay down some of the debt they acquired buying the company. This leaves the company itself weaker.
A private placement is an issue of securities only to particular investors (other shareholders can not pre-empt as with a rights issue).