financialinstruments金融工具-wenkub
2023-05-21 13:52:33 本頁面
【正文】 Private Equity Financing Source of funds for startups, new or small businesses viewed as too risky for bank lending and too small to attract the attention of investors in public markets. Funding done by strategic investors, venture capital firms who provide seed money with potential acquisition on their minds. 25 Private Equity Partnerships Structured as limited partnerships with a specified duration such as 10 years. General partner is the private equity firm, which raises a pool of money from limited partners, such as institutional investors and insurance panies. Limited partners have limited liability. Typical fee structure is 2 and 20, the sum of a management fee and ‘ carried interest’ based on capital appreciation. Induce managers to create value over long run 26 Venture capital A venture capital pany is a financing institution which joins an entrepreneur as a copromoter in a project and shares the risks and rewards of the enterprise. Projects are generally high risk with potential high rewards. Sought by new/untried businesses having little/no access to public capital /bank loans. 27 Venture capital features Long term equity finance – high stakes. Returns through capital gains at the time of exit by selling out equity holdings at high premiums . Selective generally seek above average returns. Generally financing of new / untried technology , new / no track record promoters Not only financing but also active role in mgmt . Medium to long term investment horizon. Incentives to promoters on performance. 28 Exit route Going public Sale of shares to promoter. Sale of pany to another pany – management buyin or buyout. Selling to a new investor. Liquidation 29 FIGURE 53 Venture Capital Investment in . Companies 30 Initial Public Offerings (IPOs) When panies raise capital for the first time by issuing new shares Seasoned equity offerings (SEOs) refer to issue of new shares by a pany that is already publicly traded (already made an IPO) Company assesses proposals from investment banks and chooses one – ‘ managing underwriter’ 31 IPO Risks Managing underwriter advises the pany on security design registers the issue with the SEC (3090 days) orchestrates a “ road show” assembles an underwriting syndicate who engage in book building Syndicate acts as wholesaler. Offer price set hours before stock goes public. Company bears price risk during the registration process 。 instruments Businesses raise money to finance current operations as well as for future growth Money is raised In financial markets (capital markets and money markets) By issuing financial instruments (also called securities) which give the holders claims on future cash flows of the business 2 Financial markets Financial markets describes the d
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