EB-5 investments that are affiliated with EB-5 Regional Centers are made through private placements – the sale of securities to a relatively small number of select investors. Like all private placements, which are used by companies to raise capital in a number of contexts, EB-5 private placements are governed by federal and state securities laws and regulations.
A private placement memorandum is developed that details the investment offering, including:
- Detailed explanations of the project that will be funded
- Disclosures of risk and material information consistent with all applicable federal and state laws
The economics of the project related to EB-5 specifically – the expected job creation – are also detailed in the memorandum. In some cases, the issuer of the private placement memorandum is an EB-5 Regional Center itself. In other situations, the issuer is business entity that will be receiving the investment funds and is affiliated with a Regional Center.