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CAPITAL RAISING

 

Capital Raising is a process through which a company raises funds from external sources to achieve its strategic goals, such as start initial business operations, increase working capital, M&A, joint ventures, and strategic partnerships.

Hybrid

Hybrid of debt and equity financing give the advantages (and disadvantages) of debt and equity raising and is seen as a compromise between the two. The hybrid capital raising agreement could benefit either the company or the owner. If the company flourishes and the debt is convertible to equity, investors win and otherwise, the benefits tend to be derived by the company.

Equity Raising

Equity financing is the process of raising capital through sale of its equity i.e., shares ownership of the company. By selling shares, a company is effectively selling ownership in their company in return for cash. Equity financing comes from many sources: for example, friends and families, investors, or an initial public offering (IPO).

Debt Raising

Debt financing typically involves raising capital through loans provided by third parties. The lenders of the debt have traditionally been banks and public debt markets (i.e. the bond markets) but now increasingly private equity funds. In its simplest form, debt raising involves paying the lender back its principal and an agreed amount of interest over the duration of the loan.

Debt financing is different from equity financing. In debt financing, a company assumes a loan and pays back the loan over time with interest, while in equity financing, a company sells an ownership share in return for funds. Hybrid of debt and equity financing provide a compromise between the two.

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