ASSIGNMENT ONE.docx - RESEARCH PROPOSAL EVALUATION OF RISKS...

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RESEARCH PROPOSAL EVALUATION OF RISKS OF MEZZANINE FINANCING IN RUSSIA RESEARCH PROPOSAL EVALUATION OF RISKS OF MEZZANINE FINANCING IN RUSSIA
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Abstract The purpose of this research study is to carry out evaluation on the nature, ability and the quality of risks offered in mezzanine financing specifically in the Russian market that has actively adopted this financial option especially through large banks and several investors of institutions such as Sberbank, Hi Capital, NRG funds among others. The research aims to gather findings on the risks of mezzanine financing by the conducting surveys on the details of the organization of mezzanine transactions within the country given harsh details of the Russian laws and the problems encountered in the business environment. In this study, the advantages, and disadvantages of mezzanine financing in playing its role of helping the second-rank companies that have proved manageable but experiences difficulties in raising standard leverage buyouts as well as management buyouts. One of the essential advantages has been identified as its universality and admissibility of its structures for transaction. Critical emphasis is also put on the significance of the use of the mezzanine products in the in state sponsored projects outside Russia especially in the field of real estate mortgage lending and common financing of transactions globally. Evaluation of Risks of Mezzanine Financing in Russia
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Introduction Mezzanine financing refers to a combination of debt and equity financing which offers the money lender rights to convert the loan offered to a company or other business organizations into an ownership or equity interest in case the loans cannot be paid back after the private equity companies and other senior money lenders are paid back their money. Money lending organizations have come up with a new way of securing loan agreements with the second-tier companies in the Russian market by offering alternative loans to them in a bid to control against incurring the operating losses (Lurye, and Melikhov, n.d). Through a public offering, the money lenders secure guarantee for payback through an opportunity of becoming part of the ownership structure although this does not usually satisfy the expectation of the business owners for small and medium sized companies. Mezzanine finance offers the best alternative through the mezzanine loan product to access inflow of available fund that will help steer them towards achieving their business objectives while at the same time adequately handling the pressure of the venture capital secured from the senior lenders (Hille, K and Wildau, 2015). The entry of mezzanine financing in a loan deal will also encourage the money lender to improve their loan offer as they sense some form of security and guarantee of payback.
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  • Winter '18
  • N/A
  • Debt, mezzanine loan, Mezzanine Financing

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