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CS Professional · Strategic Management and Corporate Finance · Raising of Funds - Private Funding

Meera Textiles Pvt Ltd, an unlisted company, needs funds quickly with minimal disclosure and wants only a few sophisticated investors who can negotiate covenants and board representation. Which funding route best suits this need?

Private placement to selected investors, such as a private equity fund, best fits. It allows speedy fund raising, negotiated covenants, board representation and limited disclosure, whereas public issues and IPOs require wide disclosure, longer timelines and subscription by the general public.

  1. AA public issue of equity shares with an offer document filed for public subscription
  2. BPrivate placement of securities to selected investors such as a private equity fundCorrect
  3. CA rights issue offered to the general public
  4. DListing on a stock exchange through an IPO to retail investors

Explanation

Private placement to selected investors allows quick closure, negotiated covenants and board nominee rights, with lighter disclosure than a public offer. The other three options involve the general public, wide disclosure and longer timelines, so they do not fit the stated needs.

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