Mezzanine capital or mezzanine financing (Italian mezzo 'half') is a collective term that describes types of financing that, in their legal and economic terms, represent a mixture of equity and debt capital. Bank-independent mezzanine financing is a modern form of financing and a standard financing instrument for companies. We have focused primarily on property developers and project developers.
Mezzanine financing is particularly suitable for balance sheet and equity-friendly growth or expansion financing.
3. How much does mezzanine capital cost?
Mezzanine is more expensive than a classic loan because investors usually demand a risk premium for the subordination of their debt capital. At the same time, the costs are below those of pure private equity financing.
Mezzanine financing is provided by mezzanine funds, but also development banks, private investors or on crowdinvesting platforms.
Mezzanine financing is particularly suitable for young and fast-growing companies, as well as for established companies that want to build up or expand their production or open up new markets. Especially in the initial phase, there is often a high need for investment, which often cannot be financed through traditional bank loans due to a lack of creditworthiness or collateral.
Mezzanine capital always makes sense when additional equity is required for a real estate project or project development and the project is still profitable despite the additional equity.
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