The definiation of Private Equity Fund
Private Equity refers to the risks and rewards between whether to determine the form of a financing between senior debt and equity financing . For companies and stock recommendations, mezzanine investments are usually in the form a very flexible long-term financing , the degree of dilution of this financing to be less than the stock market, and can be adjusted based on special needs Mezzanine Financing payment , can also be determined according to the company’s cash flow situation.
Mezzanine Debt is a non-guaranteed long-term debt , this debt with investors in the interests of the financiers of the subscription rights. Mezzanine Loan is only subordinate to a debt ( subordinate debt ), but it is often used as a synonym for subordinated debt. Mezzanine Debt interest rates are generally between 10% and 15%, investors target rate of return is 20% to 30%. In general, the lower mezzanine interest rate, the more equity subscription rights.
The applicable conditions of Subordinated Debt:
1)Accepted under the following circumstances Mezzanine Loanconsider lending more than the general current loan company
2)A lack of sufficient cash for expansion and acquisitions;
3)Two existing bank line of credit is insufficient to support the development of enterprises.
4)Many years of having three companies.;
5)At least for one year (the past twelve months) has a positive cash flow and EBITDA ( did not lose interest, income taxes, depreciation and assessed prior to operating income );business is a growth industry or account for a large market share.
6)Management firmly believes that enterprises will be a great development in the coming years;
7)It is estimated that within two years can be listed and to achieve a higher stock price, but now the poor IPO market conditions or company performance is not sufficient to achieve the desired IPO , so first-come a Mezzanine Loan to total financing cost reduction Private Equity Fund sources of return.
The return of Private Equity Fund is usually obtained from one or several sources:A cash coupon, usually a floating rate higher than the relevant inter-bank interest rates.
Mezzanine Debt ensures that a basic level of coverage is available to all who meet minimum requirements of residency. In an effort to keep health care costs down, the government puts a cap on what health care providers can charge. Physicians argue that these caps can restrict their earning potential and limit the providers’ ability to cover costs, pay for their student loans and keep pace with the cost of living.
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