Capital Investment

Posted on 02. Jul, 2011 by admin in Uncategorized

The capital investment is an activity whereby a financial investor to enter the capital of companies that need equity . The term generally refers equity investment in companies not listed on stock exchange (hence its name unlisted capital or private equity as opposed to the English term public ). In French this corresponds to the concepts of private enterprises as opposed to open capital.

The companies that make up a portfolio of interests by making private equity operations are holding companies or investment funds.

 
Capital Investment

The term private equity refers to shares of financial companies (including equity capital for companies, or shares in partnerships) that are not traded on a market, as opposed to public equity , which means securities who have been scoring procedures on a public market.

Regulatory obligations and guarantees of private equity are lower and liquidity much lower, due to the greater difficulty in the transfer counter . To compensate for this, capital investment is long-term performance than those of financial markets.

The operation of private equity is quite simple: it is to buy a business, then sell it a few years later having previously donated a portion of the loan with the income of the company. The problem therefore lies in:-The choice of the company. A large number of constraints required (stable company, established with a strong cash generation, ..)-In assessing the amount of purchase and the appropriate debt structure appropriate (there are indeed many ). Which requires a model (Model LBO).

The capital is divided into several segments to the following characteristics:

• Seed capital (also called seed capital) investors in seed capital, mostly individuals, providing capital and their networks and experiences of entrepreneurial projects that are still in stage of research and development. The objective of this phase, very risky financially, is to finalize the development of technology in the form of prototype to validate the success of the technological challenge, and begin to test the existence of a market. The signature of a first customer for the transition stage venture capital.

• Venture Capital : Investors in venture capital provide capital and their networks and experience in the creation and early development of innovative companies with high potential. The term “risk” used in France (in other countries, is employed most often the term Venture Capital ), reflects poorly the appearance of “business venture”, which makes the capital investment business fundamentally different from the purely financial businesses. The few successful projects should more than offset capital losses of those who fail.

• Capital development : investment involved at the time of the creation of the new company ( start up ). Also known as Capital post-creation phase of the first development ² .

• Development capital : the development capital for companies that have crossed the stage venture capital, and thus validated the potential of their market and who need additional funding to support and accelerate growth, regardless of their growth (funding their need for working capital), or their external growth (acquisitions).

• Capital Transmission : also known as the term LBO (leveraged buyout), the operations of leveraged buyout are to acquire the entire capital of a company profitable, generally evolving on a mature market, a combination of capital and bank financing (structured debt). They allow an officer, partner in a private equity investment, transferring the business, or more generally to prepare the estate by selling his company in several steps (LBO double trigger).

• Capital reversal : the reversal capital investors usually acquire all (or even a majority) of the capital of a company in difficulty, and then inject them the financial resources to implement a recovery plan.