Approach
Our primary reasons for providing mezzanine financing is that its easily adaptable capital structure to suit both the lender and the borrower as well as to protect the interests of the lenders
Why private debt fund for lenders?
Private Debt & Direct Lending Credit, as investors, search for yield and opportunities that are not correlated to tradition bond and equity strategies and often with less volatility than many public markets
Why Results Based Financing (RBF)?
WHAT’S RBF?Revenue-based financing (RBF), is a venture debt or hybrid structures blending a revenue or profit share concept with an equity ownership stake. It is first and foremost a debt instrument, that is paid back by sharing in a company’s revenue.
To whom is RBF aimed at?
RBF is for growing companies that either do not have the current revenue growth rates or scale or Founder desire to attract venture capital and/or lack the assets and meaningful profitability/cash flow to procure traditional debt products (bank financing) at the time of investment.
What’s TMEI RAIF ?
Techno Media & Entertainment Invest RAIF (ongoing) is a Luxembourg alternative investment fund (AIF) to support TME small-medium companies financing and funding their company and business development.
The Private Equity Fund will primarily invest in Techno Media & Entertainment (TME) companies with good EBITDA margin (higher number in comparison with its peers), sizeable customer base and proven business model, track records of earnings and cash flow generation.
TMEI RAIF can offer the most attractive risk-adjusted returns for investors that require financing to fund a business development financing needs as well as corporate event such as a buyout, refinancing, recapitalization, ownership transfer, or acquisition.
The General Partner (GP) is targeting a net internal rate of return (IRR) of 8%- 10% (unlevered) and the investment strategy will utilize 3 primary forms of capital deployment; (i) Senior debt funding – 1st position secured against current and/or future revenues. ; (ii) Mezzanine and RBF funding – 2nd position secured against current and/or future sales revenues, (iii) Equity funding – ownership of established branded events and/or TME companies
DEBT/EQUITY ABOUT MEZZANINE
What are Mezzanine Debt instruments ?
- Convertible debt, which is debt that converts into common equity at specific terms
- Participating debt, where interest payments are combined with participation in equity or convertible with Warrants.
Our Mezzanine debt instruments benefits are
- Attractive risk-adjusted return
- Downside protection of private structures
- Reduced volatility from high current coupon.
What is mezzanine for ?
Be placed into the area in between of the equity capital and current liabilities of a company, we assist growth finance small-mid technology, media & entertainment companies for using debt, equity and hybrid financing techniques to achieve business expansion in a cost-effective manner
What type of Loan mezzanine structure?
Mezzanine financings are completed through a variety of different structures, including:
- Term 3 to 7 years
- Ticket size above €5 million
- Cash interest is either fixed throughout the term of the loan or is floating based on LIBOR or other base rates
- Or a combination of cash and ‘Payable in kind’ - PIK.
Our mezzanine deals along with the typical interest payment associated with debt, also includes an equity stake in the form of attached warrants or a conversion feature, similar to that of a convertible bond.
What are the mezzanine financing investment requirements?
Mezzanine loans will typically assume many of the following attributes:
- Total sales, profits or EBITDA positive (above €2 million) as a measure of cash flow.
- Minimum 5 years of operations and 2 years of audited financial
- Loan Amount:$2 million to $6 million
- Interest Rate: 10-12% paid currently, plus 4-8% in deferred interest
- Term: 5 years interest only; bullet maturity (pre-payments may be allowed)
- Collateral: behind Senior Lender + an unencumbered pledge of owners’ stock
- Other Requirements: Financial Covenants (Operations, Leverage and Liquidity), and Board Observation rights
ABOUT RAIF
What’s RBF REVENUE-BASED FINANCING
“payments that are tied to your revenue (make more, pay more)”Revenue-based financing (RBF) is a type of financial capital provided to small or growing businesses in which investors inject capital into a business in return for a fixed percentage of ongoing gross revenues, with payment increases and decreases based on business revenues, typically measured as either daily revenue or monthly revenue.
Who is it for?
RBF is for growing companies that either do not have the current revenue growth rates or scale or Founder desire to attract venture capital and/or lack the assets and meaningful profitability/cash flow to procure traditional debt products (bank financing) at the time of investment
What’s RBF return for investor
Usually the returns to the investor continue until the initial capital amount, plus a multiple (also known as a cap) is repaid. Generally, RBF investors expect the loan to be repaid within 3 to 5 years of the initial investment.