TL;DR
Companies raise capital for acquisition, rebalancing their capital mix, growth, and working capital needs. This supports asset enhancement or acquisition, debt management, and operational expansion, and sustains day-to-day financial needs.
Table of contents
Acquisition.
Raising capital for acquisition allows companies to enhance shareholder value. This could involve funding to improve existing assets or acquiring new assets that complement the business like a mining company expanding its resource inventory or acquiring another deposit.
Rebalancing the capital mix.
This strategy is often used by companies with existing debts. Raising capital enables them to pay off outstanding liabilities, thus optimizing their financial structure and reducing reliance on debt.
Growth.
Additional capital is essential for companies looking to expand their operations, especially those undertaking large projects with high upfront costs and long timelines. This capital infusion helps sustain growth and project execution.
Working capital.
Capital is also raised to meet working capital requirements. This is crucial for maintaining the smooth operation of the company, covering everyday expenses, and ensuring the business can meet its short-term financial obligations and operational needs.