Mezzanine definition

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Mezzanine investment is a hybrid capital (either subordinated loan or preferred equity) that lies between equity and loans.

It has still lower risk than equity – mezzanine financing is repaid before equity, but after all more senior obligations have been fulfilled.

Additionally to the usual interest, bonuses that depend on the profitability of the project may be added to the mezzanine capital.

Here is a mezzanine loan example:

Read more about other capital types:

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