Capital Raising

Key Highlights

• Capital Raising refers to the process through which companies secure funds to support growth, expansion, acquisitions, working capital needs, or debt refinancing.

• Key forms of capital raising includes equity capital,debt capital, private placements and hybrid instruments.

Capital Raising

Capital Raising refers to the process through which companies secure funds to support growth, expansion, acquisitions, working capital needs, or debt refinancing. This capital can be raised through equity, debt, or hybrid financial instruments, depending on the company’s strategic and financial requirements.

For corporates and emerging businesses, effective capital raising is critical to scaling operations, strengthening balance sheets, and enhancing long-term competitiveness.

Key Forms of Capital Raising

1. Equity Capital

Companies raise funds by offering ownership stakes to investors. Common equity-raising routes include:

• Initial Public Offerings (IPOs)

• Follow-on Public Offers (FPOs)

• Qualified Institutional Placements (QIPs)

• Rights Issues

  Equity dilutes ownership but strengthens the balance sheet without increasing debt obligations.

2. Debt Capital

Funds are raised by issuing fixed-income instruments, which require periodic interest payments and repayment at maturity. Common routes include:

• Corporate Bonds / NCDs

• Commercial Paper (CP)

• Bank Loans

• Structured Credit / Mezzanine Financing

  Debt allows companies to scale while retaining ownership control.

3. Private Placements

Capital is raised from a select group of institutional or accredited investors, often allowing for faster execution and flexible structuring. This includes:

• Private equity investments
• Venture capital funding
• Private debt issuances

4. Hybrid Instruments

These combine features of both debt and equity, such as:

• Convertible Bonds

• Preference Shares

  They offer strategic balance sheet advantages depending on the company’s growth stage and capital structure.

Why Capital Raising Matters

• Supports business expansion and acquisitions

• Enables investment in new technologies, markets, and capabilities

• Strengthens financial stability and liquidity

• Optimizes capital structure for long-term growth

• Enhances market visibility and investor confidence

FAQs on Capital Raising

1. What factors determine whether a company should raise equity or debt?

Companies consider their current leverage, cash flows, ownership goals, cost of capital, and market conditions. Equity reduces debt burden, while debt preserves ownership.

2. How long does a typical capital-raising process take?

Public market issuances may take 2–6 months, depending on regulatory requirements, while private placements can be executed more quickly.

3. Does capital raising dilute ownership?

Only equity-based raising leads to dilution. Debt and certain hybrid instruments (unless converted) do not impact promoter or shareholder ownership.

4. How do market conditions impact capital raising?

Favourable equity markets, stable interest rates, and strong investor sentiment improve pricing and participation. Volatile markets may delay or reduce issue size.

5. What role does an investment bank play after funds are raised?

They assist with post-issue compliance, investor communication, market-making (for equity), and strategic capital planning for future requirements.