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MDV’s Equity Linked Financing Structures
To expand the reach and footprint of MDV’s financing structures, MDV has introduced a new equity linked financing product. The product is essentially an Islamic or conventional financing facility with an option to convert part or all of the outstanding balance in the facility into common equity or preference shares, in the event that there is an opportunity for the facility to be capitalised and liquidated via a trade sale, IPO, M&A or similar event.
With the introduction of the product, MDV is able to expand its financing scope to include higher risk; higher return technology projects in light of the potential for higher market returns. Additionally, given the potential for higher returns upon exit, MDV is able to offer lower financing rates to businesses as a means to lower the cash consumption of innovative businesses as they work to build value. The product structure also include warrants that may be issued to MDV as part of the financing package.
The Equity Linked Financing Structures is an option for MDV to extend financing for the following criteria:-
- A riskier projects or applicants in view of a higher projected returns;
- To ease the cash flow burden on applicants due to tight repayment obligations; and
- To improve customers’ debt to equity ratios.
MDV will take an option to convert MDV’s outstanding financing into equity structure for up to 20% of the targeted customer’s issued capital subject to the terms negotiated and agreed.