Indigo Capital - Why mezz with anyone else?

For taking mezzanine risk, we seek a blended return which is partly debt and partly equity related. Typically the borrower will pay interest on the mezzanine loan at a market-related interest rate. An equity interest might be in the form of a warrant to buy a pre-agreed amount of equity at a fixed price at a future time or an amount of equity purchased up-front.

Sometimes mezzanine capital is structured using other financing instruments, such as loan stock or preference shares.  Mezzanine capital can also be in the form of a debt instrument convertible into equity at a future date.