- +91 9356239182
- [email protected]
Equity Finance
Equity finance refers to the method by which a company raises capital by issuing shares or stocks to investors in exchange for ownership stakes in the business. Essentially, the company sells a portion of its equity (ownership) to raise funds that can be used for expansion, development, or other corporate purposes.
Here are the key points about equity finance:
- Sources of Equity Finance
- Initial Public Offering (IPO): When a private company first offers shares to the public through a stock exchange.
- Private Equity (PE): Investments from private investors, such as venture capital firms, private equity funds, or angel investors.
- Rights Issue: A way for existing shareholders to purchase additional shares, usually at a discounted price, to raise capital.
- Venture Capital: Investments made by venture capitalists into early-stage or startup companies with high growth potential.
- Types of Equity Instruments
- Ordinary Shares: Common stockholders have voting rights and may receive dividends, depending on the company’s performance.
Preferred Shares: These typically do not carry voting rights but have a fixed dividend and have priority over ordinary shares in the event of liquidation.
