A Capital Subscription Fund is method of funding used for listed companies whereby a facility is provided in exchange for ordinary stock in the company, typically at an agreed discount to the market price. The facility can be drawn down in tranches over a period of time or in a single transaction.
Considered more sophisticated than the traditional PIPE or Private Investments in Public Equity, where discounted stock is issued to raise capital for the issuer or Structured PIPEs that issue convertible debt.
Capital Subscription Funds are particularly attractive to small to medium sized publicly listed companies and offers advantages in time and costs required to raise funds over traditional forms of financing. Capital Subscription Funds are most likely to be used by companies during periods of growth and acquisition. They are also attractive to companies which face uncertainly accessing traditional equity financing.
The opportunity to invest in a Capital Subscription Fund is typically reserved for high net worth individuals and sophisticated or professional investors.