Capital
Capital
Each of our investments include mezzanine debt and we may also invest in the equity in the same companies, either on a minority or majority basis depending on the situation and opportunity. Below are more details about mezzanine loans and equity investments.
Mezzanine Debt
Mezzanine debt is a loan that is contractually subordinated (or behind) senior bank debt, but ahead of the equity owners of a company. It typically has a five to six year maturity and during the term of the loan interest is due monthly and principal due at maturity. Mezzanine debt is intended to fill the financing gap that sometimes exists between bank debt and equity in a company’s capital structure. It is more cost effective and less dilutive than equity, and also more “patient” than senior bank debt, as it requires no principal payments during the loan term.
Equity
Equity investments can be either be on a minority or majority ownership basis and are typically in the form of either common or preferred equity (or both) of a firm. When making an equity investment, it typically accounts for 10% to 50% of our total investment.
