Class 7&8 (Raising Long Term Finance)

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Class 7&8 (Raising Long Term Finance)

  1. 1. Raising Long Term Finance
  2. 2. Venture Capital <ul><li>High risk and high return profile </li></ul><ul><li>Active interest in guiding </li></ul><ul><li>Liquidate its investment after 3 to 7 years </li></ul><ul><li>Appears synonymous with tech and bio-tech </li></ul>
  3. 3. INITAIL PUBLIC ISSUE <ul><li>Benefits </li></ul><ul><ul><li>Access to capital </li></ul></ul><ul><ul><li>Respectability </li></ul></ul><ul><ul><li>Investors recognition / visibility </li></ul></ul><ul><ul><li>Opportunity </li></ul></ul><ul><ul><li>Liquidity </li></ul></ul>
  4. 4. <ul><li>Disadvantages </li></ul><ul><ul><li>Dilution </li></ul></ul><ul><ul><li>Loss of flexibility </li></ul></ul><ul><ul><li>Disclosures </li></ul></ul><ul><ul><li>Public pressure </li></ul></ul><ul><ul><li>Costs </li></ul></ul>
  5. 5. Cost associated to public issue <ul><li>Underwriting expenses </li></ul><ul><li>Brokers </li></ul><ul><li>Fees to manager (investment banker) </li></ul><ul><li>Fees for registrars </li></ul><ul><li>Printing expenses </li></ul><ul><li>Postage expenses </li></ul><ul><li>Advertising and publicity </li></ul><ul><li>Listing fee </li></ul>
  6. 6. Book building <ul><li>Phases in IPO pricing </li></ul>
  7. 7. RIGHTS ISSUE
  8. 8. PRIVATE PLACEMENT
  9. 9. BOUGHT-OUT DEALS
  10. 10. Term loan <ul><li>Rate of interest on the basis of credit risk </li></ul>
  11. 11. Bonus shares

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