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This post is a crash course on promoter funding, which serves as a bedrock for my next post.
Promoter funding/ financing, is the colloquial term used for raising of debt funds by Promoters of companies usually against the security/ comfort of shares. Thread 1/13
Promoter funding/ financing, is the colloquial term used for raising of debt funds by Promoters of companies usually against the security/ comfort of shares. Thread 1/13
A promoter, many a times, needs money for (a) equity infusion in a new/ growing business, (b) personal use (c) enhancing stake in established business (d) family settlement etc.
If he doesn't have enough cash at his disposal, he borrows from finance firms. 2/13
If he doesn't have enough cash at his disposal, he borrows from finance firms. 2/13
The most liquid and widely accepted collateral/ security for these borrowings are shares of established (usually listed) companies.
These shares are pledged to the financing firm (or a trustee) to avail of the debt facility. 3/13
These shares are pledged to the financing firm (or a trustee) to avail of the debt facility. 3/13
