7.1.5 How a DPP Raises Capital
Most DPPs are sold through a private placement under Regulation D of the Securities Act of 1933. This means that ownership is usually sold to accredited investors and without a public offering. See Chapter Twelve for more details about Regulation D and accredited investors.
Typically, accredited investors receive a private placement memorandum that provides disclosure information about an upcoming offering. Investments made through private placements, especially for limited partnerships, tend to be relatively large investments from a small group of limited partners.
Sometimes a DPP will be sold through a public offering. This usually involves an underwriter that will sell to the public. In this case, each investor will receive a prospectus describing the DPP in detail. For public offerings, underwriters often form a syndicate in which they bring in other underwriters (broker-dealers) to sell the securities to the public. This is called a managed offering, with the lead underwriter doing the managing. In a non-managed offering, the general manager, also called the sponsor, hires a wholesaler to market the DPP to broker-dealers, who market it