Howdy shoaib!
The VCapital Ltd website gives us this concise
definition for equity investment.
http://www.vcapital.co.nz/help/default.asp
"So what is equity investment?"
"Where an investor or investors' buys shares in
a company, thereby sharing in the returns as
well as the risks associated with that company."
This web page provided by The West Lothian Venture
Fund has a bit more on equity investments.
http://212.96.140.14/faq/faqs/detail_html?prname=6&page=1
"What is equity investment?"
"This is where you sell shares in your company
to an outside investor who will then become a
part owner of the business. Unlike loans where
interest and repayments may be required even
if you are making losses, returns to an equity
investor can only be made if the company is
profitable. Risks are usually much higher and
investors will therefore expect to share in the
profits and to make a capital gain when the
company is sold."
So, the purpose of equity investment is to
provide a company with funds (money) with the
provider of the investment getting a certain
percentage of ownership, usually in the form
of stock in the company, in the hopes of some
return on their investment.
Search Strategy:
Google search on: "what is equity investment"
://www.google.com/search?q=%22what+is+equity+investment%22
If you need clarification, feel free to ask.
Looking Forward, denco-ga |
Request for Answer Clarification by
shoaib-ga
on
20 Jun 2003 19:10 PDT
Denco-ga again thanks for your excellent answer. But please
note that I need little more clarification of your answer. I
want to know that in case of equity investment if a
borrower asks for "specific" equity investment or amount then
in this situation the provider(the investor) of equity shall
be able to provide that specific equity amount, for example
if the borrower asks for 10% equity amount compared to the
value of the property then in this case the provider(the
investor) of equity shall be able to provide that specific
equity amount for 'investment'? Thanks.
|
Clarification of Answer by
denco-ga
on
22 Jun 2003 16:14 PDT
Howdy shoaib!
Usually equity investment is in a business (a retail store
for example) but if the business is real estate, say, an
office building, then the equity position could be (as in
your example) in the property, as it is the business.
Also, with an equity investment, it is not so much that the
person seeking the investment is borrowing the money, but
rather is getting money in exchange for giving away some
percentage of ownership in the business. The terms of the
equity investment could be structured so that the shares
could be repurchased at some future date by the business
owner, usually at a premium.
To build on your example, if the building owner (the person
looking for the investment) has property worth $1,000,000,
then that person could certainly go out and give 10% of
the business (in this case, 10% of the value of the building)
in exchange for $100,000 (10% of the valuation of the building)
with the investor then getting 10% of the net rental income
from the building.
The above example might depend on the building owner owning
the building completely, as there might some impact on the
attractiveness of an equity investment if there was a large
loan out on the property.
In other words, I do not see any reason where a business owner
could not go to an investor and ask for a specific percentage,
presented to be worth a specific dollar value, in exchange for
that amount of money.
The attractiveness of the equity investment is dependent on
several factors, such as the potential return on investment,
the payment structure, etc.
Hope this clarifies things!
Looking Forward, denco-ga
|
Request for Answer Clarification by
shoaib-ga
on
23 Jun 2003 17:16 PDT
Denco-ga researcher please note that great and top rated
answer has been provided by you and your answer deserves
***** star rating. But I only need a little confirmation
clarification of your answer. I want to mention that as
specified by you that borrower can get "any" amount of
equity investment or amount for property business so it means
that 'equity investment or amount' can "fullfill the
individual desires" of the borrower. Please 'confirm' this
statement. Great thanks for your help from shoaib-ga.
|
Clarification of Answer by
denco-ga
on
23 Jun 2003 20:57 PDT
Howdy shoaib!
You are seeking confirmation that 'equity investment or amount' can
'fullfill the individual desires' of the borrower.
Yes, but keep in mind that the "desires" must be realistic in relation
to the equity position being offered. To expand on the earlier
example;
if the businessperson owns an office building worth $1,000,000, that
is completely paid off, and produces a net income of $10,000 a month,
and
wants to offer a 10% equity position in exchange for $500,000, then
the
building owner is probably not going to get their "desires" fulfilled.
Hope this helps! denco-ga
|
Request for Answer Clarification by
shoaib-ga
on
27 Jun 2003 15:37 PDT
Denco-ga researcher please note that if possible for you
then please provide the answer of my another question ID
221322 and please note that another question ID has simple
question in it and my second question is that the information
you have provided above for equity can also be applied for
private placement, please provide its answer in 'yes or no'
and if the answer is yes OK it means my query is solved but
if the answer of that question is no then I will post
another question in this answers.google.com website for its
answer? Great thanks for your help from Shoaib.
|
Clarification of Answer by
denco-ga
on
30 Jun 2003 16:30 PDT
Yes, the information provided above could be
considered applicable to a private placement
as well.
Looking Forward, denco-ga
|
Request for Answer Clarification by
shoaib-ga
on
20 Dec 2003 16:45 PST
Hello Denco researcher I hope you would be fine and in the
best of your health. Denco researcher I have now contacted you
after a long time but please take a little time for me and
provide to me a little more clarification of your equity
answer. Denco researcher please note that you have told above
that 'equity funding sources' can provide equity loan for
investment for "whatever" the requirements of the borrower are
so therefore I want to know that the equity funding sources
of the "investment banks" can also provide equity loan
according to that mentioned statement? For example Credit
Suisse First Boston international investment bank or
www.csfb.com website and please accept many thanks for your
help for that from Shoaib.
|
Clarification of Answer by
denco-ga
on
09 Feb 2004 16:49 PST
Howdy shoaib,
Apologies on the delay of this clarification.
You want to know if the equity funding sources of "investment banks"
can also provide equity loans to fit the requirements of the borrower.
Yes, I would say that Credit Suisse First Boston LLC (your example)
could put together a funding package, but it would have to be quite
a substantial deal for them to consider it. From their "Private
Equity Overview" web page.
http://www.csfb.com/investment_banking/private_equity/index.shtml
"CSFB Private Equity has completed more than 800 transactions with
an aggregate transaction value of over $120 billion."
So the average transaction with Credit Suisse First Boston LLC for
the kinds of deals is 150 million dollars. That is goodly amount
of equity.
As I have stated previously, the attractiveness of the equity
investment is dependent on several factors, such as the potential
return on investment, the payment structure, etc. and in this case,
the size of the equity investment and position.
Looking Forward, denco-ga - Google Answers Researcher
|
Request for Answer Clarification by
shoaib-ga
on
03 Oct 2004 09:52 PDT
Denco researcher I hope you would be fine. Denco researcher
if possible for you and if you can take a little of your
time then please provide the answer of my posted question ID
406134 containing simple question in it.
Many and sincere thanks for that help from Shoaib.
|
Clarification of Answer by
denco-ga
on
03 Oct 2004 10:50 PDT
Howdy Shoaib,
I will look at the referenced question and time allowing will work on it.
Looking Forward, denco-ga - Google Answers Researcher
|
Request for Answer Clarification by
shoaib-ga
on
30 Jan 2005 18:19 PST
Denco researcher I hope you would be fine. Denco researcher if
possible for you then please take a little of your time and provide
to me the answer of my newly posted simple question ID 452925 and
please note in that ID I have asked simple question about "hard
equity loan". Denco researcher if you provide the answer of that
simple ID then please note that I know hard equity lenders can
provide hard equity loan but I need the answer of that specific
question ? Denco many thanks for that help from shoaib.
|
Clarification of Answer by
denco-ga
on
30 Jan 2005 19:43 PST
I will take a look at it, Shoaib.
Looking Forward, denco-ga - Google Answers Researcher
|
