Mezzanine financing

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Mezzanine financing is a hybrid between debt and equity. It is issued on terms that subordinate the loan to various levels of senior and junior debt. The advantages of mezzanine financing for capital expenditures into increasing capacity, research and development, or new market expansion are that it’s cheaper than equity and offers more flexible terms and covenants than senior debt. When utilized in conjunction with senior debt, mezzanine capital reduces the amount of equity required in a business. This creates a more efficient structure that lowers the after-tax cost of capital, is less dilutive than equity financing, and enhances the return on equity.

We have set up the first Mezzanine Fund in Georgia to target well-managed companies with strong cash flows and good business prospects, as mezzanine financing can be a smart solution for a variety of their liquidity or expansion needs.

•    $50mln fund to be launched in mid-2015
•    Objective to provide growth capital to companies with high potential
•    The fund will target companies operating in various sectors in Georgia
•    Focus on 8-10 projects, with $2-8mln investment per project.

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