12-08-2013, 04:20 PM
Raising long Term Sources of Finance
Raising long .pptx (Size: 48.58 KB / Downloads: 15)
When a company is formed, it first issues equity shares to the promoters and also, in most cases, raises loans from banks, financial institutions and other sources. As the need for financing increases, the company may issues shares and debentures privately to promoters’ relatives, friends, business parteners, employees, financial institutions, banks, mutual funds, venture capital funds and others.
Venture Capital
Venture capital funds seek to support growing firms during their initial stages, before they are ready to make public offering of securities. It is provided mainly in the form of equity capital.
It represents financial investment in a highly risky proposition made in the hope of earning a high rate of return.
Initial public offer (IPO)
The first public offering of equity shares of a company, which is followed by a listing of shares on the stock market, is called the initial public offering. An IPO can be done either through a fresh issue of shares by the company or through an offer for sale of existing shares to investors. In the former case, fresh capital is injected into the company and its equity based expands. In the latter case, there is no infusion of capital in the company because the proceeds of the issue go to shareholders who offer their shares for sale.
Benefits of ipo
Access to capital
Respectability
Investor recognition
Window of opportunity
Liquidity
Benefit of diversification
Signals from the market