What type of investor capital is most popular in Europe?

August 17, 2019

by a searcher from INSEAD in Geneva, Switzerland

Hi All, I'm looking to find out if European investors favour preferred equity or subordinated debt (or another instrument)? And does this vary by investor type?
Thanks!

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Reply by a searcher
from London School of Economics and Political Science, University of London in San Francisco, CA, USA

Hi, Dr. Thomas Buhler will probably give you more of insight, however for what it's worth and for the benefit of others in the forum, I would say Preferred Equity is usually mixed with loan notes with some form of interest (6-8%) from the investor. The loan notes are usually subordinated only to the bank /other debt for the acquisition/ any working capital requirements. The loan notes are usually unsecured. Loan notes are an easier way for the investor to extract cash as there is no requirement for distributable reserves to be available before making interest and capital payments. The interest on the loan notes are also deductible as line item for the purposes of calculating the profit for corporate tax purposes.

Hope that helps.

Reply by an investor
from University of Commerce Luigi Bocconi in London, UK

You can reach out to me directly on redacted and ill share what i know. I successfully raised and partially exited my SF - and i am a serial SF investor now. Looking forward to speaking to you, tobias

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