Hybrid & Equity-Linked Capital Instruments
Convertible Bonds - PIPEs - Convertible Preferred Shares - Warrants - Structured FInancing.
An educational platform for corporate issuers evaluating flexible financing alternatives to straight debt & equity
Between Straight Debt and Equity, There's a Third - More Flexible Option
Straight Debt
Often the most expensive and restrictive source of capital, with higher coupons, covenants limiting actions, straight debt favours the stable & mature business.
Straight Equity
Up front dilution with the equity that you believe is undervalued. Furthermore, straight equity raises are frequently perceived as a sign of weakness in outlook.
Hybrid Capital
A balance of less restrictive fixed income capital, often combined with deferral of possible dilution and the ability to monetize the volatility of a company's stock.
Knowing Where the Market Is
Natural bias dictates that people frequently overvalue their own positioning. A deeper understanding of the 'outside in' market view helps rationalise the advice of banks & advisors and enables issuers to capture value by dynamically reacting to market positioning.
Understanding Investor Motives
Issuers often fail to truly understand the investors and ultimate holders of their capital. The impact of this ranges from inefficient pricing structures for large marketed capital raises, down to major value leakage and sub-optimal T&Cs in private/bilateral transactions.
Capital Markets Advisor Impartiality
Capital Markets Advisors are a useful agent, however again, frequently rely on a combination of fees, retainers and issuance bonuses to earn their money. Their advice focuses on transaction points and can miss broader fiduciary duties of issuer boards.
Bank Impartiality
Banks largely get paid on issuance of capital - incentivizing them to bring deals to market. Often due to competitive tender processes, margins are squeezed furthering the reliance on closing transactions to get paid.
Why Issuer Education is Important
Whatever Your Capital Goals - We Aim To Help
Our Resources
Convexity Insights was built to enhance investor and finance professionals working knowledge on equity-linked, hybrid and structured capital products.
If you are serious about investing in these instruments, issuing them for your company, or deepening your academic knowledge across some of the most exciting and idiosyncratic instruments in financial markets - we highly suggest you check out our in depth publications.
Greater knowledge always brings; greater risk mitigation, greater pricing power, greater efficiency.