SECURITIES - Investment Capital
SHARES
Investment Capital and the Issuance of Securities as a Source of Financing
At Tomes & Partners, we specialize in structuring and facilitating investment capital for companies seeking financial resources for growth, acquisitions, or strategic partnerships. Investment capital represents funds raised from investors in exchange for investment securities, which grant ownership stakes in a company or rights to future returns. This type of financing enables businesses to secure capital without incurring debt, unlike debt instruments such as bonds.
Types of Investment Securities
Companies can raise investment capital through various types of securities that provide investors with ownership or participation in company profits:
- Shares (Equity Securities) – the most common form of investment securities, granting investors ownership stakes in a company.
- Common Shares – provide voting rights and entitlement to dividends.
- Preferred Shares – offer priority in dividend payments, often without voting rights.
- Warrants – grant investors the right to purchase company shares at a predetermined price in the future.
- Convertible Bonds – debt securities that can be converted into shares under specific conditions.
- Investment Certificates – structured financial instruments that allow investors to participate in company returns or track its performance through specific financial mechanisms.
The Process of Issuing Investment Securities
Tomes & Partners provides expert guidance in structuring, preparing, and executing the issuance of investment securities through various placement strategies:
- Private Placement – offering securities to a select group of qualified investors, such as institutional funds or strategic partners.
- Public Offering (IPO, SPO) – issuing securities to the broader investing public through a stock exchange.
- Hybrid Financing Models – combining different types of securities to optimize a company’s capital structure.
Advantages and Disadvantages of Issuing Investment Securities Compared to Debt Instruments
Advantages:
- Access to capital without debt obligations – unlike bonds, there is no requirement to repay principal or make fixed interest payments.
- Enhanced liquidity and financial stability – companies secure long-term capital for expansion or innovation.
- Potential for strategic partnerships – new investors may contribute not only financial resources but also industry expertise, business connections, and market access.
- Increased market valuation – publicly traded securities can enhance a company’s credibility and attractiveness to additional investors.
- Ownership dilution – issuing new shares reduces the ownership percentage of existing shareholders.
- Potential loss of managerial control – large investors may gain significant influence over strategic company decisions.
- Increased regulatory and administrative requirements – public offerings are subject to stricter compliance and oversight.
- Market volatility – the value of investment securities is influenced by external factors and market conditions, leading to fluctuations in company valuation.