Entrepreneurs sometimes come up against limits not only with regard to loans, but also equity capital. Mezzanine is the name of the solution – a form of funding that bears interest like a loan but resembles equity with regard to risk tolerance. Mezzanine protects against dilution and at the same time strengthens the balance-sheet structure.
Especially medium-sized companies are sometimes faced with restrictive lending policies although they have an adequate cash flow. This curbs growth or delays the implementation of important projects. Mezzanine capital can stop financing gaps.
Key features of mezzanine capital
Mezzanine capital is a form of funding that lies between classic equity and traditional loan financing. It is subordinate to borrowing and thus increases economic equity. The resultant improvement in credit risk ratings creates new leeway for borrowing without having to surrender shares and influence to external third parties.
Due to the quasi-equity risk position of the provider of mezzanine capital, the costs for mezzanine capital are significantly above those for borrowing, but are also well below the returns demanded by classic furnishers of capital.
Our subsidiary VR Equitypartner GmbH offers a large number of types of mezzanine finance, which consists for example of typical dormant equity holdings or profit participation certificates. These can be combined with – among other things – direct equity investments within the framework of a financing concept that fits the company.
Thanks to features such as flexible terms and repayment agreements this type of funding is also becoming increasingly accessible and interesting for medium-sized companies and their specific investment requirements.
If you would like to find out more about the offering: