Mezzanine financing is a form of intermediate financing that falls between the classification of a senior loan undertaken by conventional financial institutions and equity financing using common shares.
There are various classification of mezzanine financing, including subordinate loans or bonds, preferred or class shares, and hybrid financing. The priority of repayment for these forms of financing is lower than for senior loans, meaning a higher level of risk. Economic rationale is attained by setting the level of interest and dividend payments commensurate with investment risk.
Customer benefits of mezzanine financing include flexible redemption schedules and exit methods and the ability of existing shareholders to avoid dilution of their voting rights. In addition, given that it is possible to flexibly design financing in accordance with capital plans and capital policies, in recent years there have been rising needs among corporate clients to strengthen their financial infrastructures, acquire businesses, carve out subsidiaries and businesses, execute business successions, and take companies private.
NID Bank is providing total solutions, from developing financing schemes to financing arrangements and risk management, based on a long-term outlook toward solving our clients’ balance sheet issues.
