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Profit-sharing (shareholders’) loans endowed with rights of co-determination. The lender participates in this form of mezzanine financing in the earnings of the company.
Payment in Kind (PIK-Note)
A form of corporate bond which grants the issuer an option for a period of time, usually 5-10 years, to assign the due interest payments either in cash or another payment in kind to the bond creditor upon maturity (coupon date).
English description for equity capital. In Germany, private equity is generally understood to be the provision of entrepreneurial risk capital through the purchase of shares in the company. This also includes forms of financing such as venture capital and contingent mezzanine financing. In English-speaking countries, however, venture capital is regarded as the generic expression. The commitment by the investor is usually restricted to a period of ca. 2 - 7 years. In this period the additional equity capital is to be used to fund possible investments and attain a considerable increase in the value of the company so as to sell the purchased shares again at a profit following the expiry of the commitment. An exception are evergreen funds, which have an unlimited term and provide their investors with disbursements through recurring payments, appreciation in share value and/or the realisation of portfolio companies.