TL;DR
Equity capital raising involves issuing new shares to investors for additional capital. Key types include placements for select investors and shareholder offers for existing shareholders, each with distinct advantages for company growth.
Table of contents
Equity capital raising explained.
In equity raising, companies issue new shares to investors, granting them an ownership stake. This type of capital infusion does not require repayment like a loan, making it an attractive option for many companies.
Different types of equity capital raising.
Placement
This type involves offering new shares to a selected group of investors. It’s an efficient way to raise significant capital quickly, though it may dilute the stakes of existing shareholders.Shareholder offers
These are opportunities for existing shareholders, such as through share purchase plans or entitlement offers (renounceable and non-renounceable). It allows current investors to increase their stake, ensuring a more equitable approach but might raise less capital than placements.
Understanding the intricacies of equity capital raising is essential for any listed company looking to expand or strengthen its financial base. Whether you go for a targeted placement or an inclusive shareholder offer, your choice should align with your long-term business objectives and shareholder relations strategy.