Mezzanine Financing: Tools, Applications and Total Performance

Mezzanine finance is an increasingly important part of the financing spectrum for lenders, corporations and project finance. It has many unique characteristics and categories and includes products and features which are meaningful in a diverse set of situations. Most mezzanine products are designed legally as debt instruments, but they are often exposed to equity–like risk. Proper pricing is therefore required. However, since most of the products are considered debt products, term sheets and covenants are essential to model the risk in an appropriate way. The flexibility afforded by mezzanine products is appreciated as it allows firms to structure their balance sheet in a way that acknowledges the financial sensitivities in the firm’s, or project’s, business model. That flexibility has triggered countless innovations during the last 15 years, taking into account different and evolving risk appreciation and industry specifics. Most of that innovation has occurred through contractual arrangements and adjustments. Mezzanine finance has become an area where finance, legal, accounting and credit assessment come together and are blended with industry specifics. Mezzanine Financing: Tools, Applications and Total Performance therefore takes a multidisciplinary approach, combining those factors to provide an holistic overview of the mezzanine product group and its applications. The book is divided into four sections covering:  The mezzanine market and the demarcation of the product group. A detailed examination of the individual products, with do’s and don’ts, analysis of technical features and their impact on the risk––return trade–off, valuation dynamics, pricing grid of the instruments and structuring considerations. The implications of regulation and the peculiarities of the product group when applied within specific industries, including banking, insurance, project finance, real estate and private equity. Structuring the products, legal, accounting and credit rating intricacies. Concluding with an analysis of innovations in the field in recent years, and an examination of the outlook for mezzanine products, this book is completed with appendices containing case studies and sample legal and contractual support documents to illustrate the more complex positions. References and footnotes throughout provide ideas for extensive further reading, making Mezzanine Financing: Tools, Applications and Total Performance the complete guide to mezzanine financing, and a valuable resource book for academics and professionals alike.

Luc Nijs is the founder, chairman and group CEO of The Talitha Group, a global merchant banking group and global investment holding. Before that he was with Arthur Andersen and Deloitte. In addition, Luc provides extensive advisory, executive coaching and financial training for corporations, investment funds and financial institutions, and is active in over 160 countries worldwide on a wide array of strategy, investment and capital allocation issues.  He has held academic positions in international taxation, finance and capital markets at UAMS/IPO (Belgium), Instituto de Empresa (Spain) and most recently the Aizkraukles Banka Chair in investment banking, private equity and entrepreneurial finance at the Riga Graduate School of Law (Latvia). Luc is fluent in Dutch, English, French, German, Portuguese and Spanish and is competent in Russian and Chinese. He authored Shaping Tomorrow’s Marketplace: Investment Philosophies for Emerging Markets and a Semi–Globalized World which was published by Euromoney in 2011, as well as the upcoming Global Agricultural Markets: Financial Dynamics and Industry Challenges , Palgrave Macmillan, (2014).