Capital raising can take a number of forms and can be for a variety of reasons. The most usual form is by way of a placing of shares for equity with a private equity institution. The equity raised is generally utilised for three main purposes:
- To correct/strengthen the financial base of the business by paying down some debt and replacing it with equity.
- To raise funds for a predominantly equity risk, which might be an acquisition or a new product development launch. It is often difficult to raise bank debt for an event where the outcomes are not certain and are therefore considered to be a risk for the equity providers, where higher returns can be generated.
- To de-risk the shareholders by raising some ‘money out’ by the sale of some of their shares to a professional investor. The ongoing commitment of the shareholders and their rational for the de-risking needs to be carefully presented to the incoming investor.
We will work with you to achieve the objectives of the shareholders and to present the business, the market and its key drivers in the best light for investors. We can add value in all of the above, given our different skill sets and knowledge of the private equity market.