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35МЕЗОНИННОЕ ФИНАНСИРОВАНИЕ КАК СОВРЕМЕННЫЙ ИНСТРУМЕНТ СНИЖЕНИЯ РИСКОВ ПРИ МЕЖДУНАРОДНОМ ИНВЕСТИРОВАНИИ ИННОВАЦИОННЫХ ПРОЕКТОВ
MEZZANINE FINANCING AS A MODERN TOOL OF RISK REDUCTION IN
THE INTERNATIONAL INVESTMENT OF INNOVATIVE PROJECT
УДК-33
Першин Андрей Анатольевич, студент, Российский экономический университет имени Плеханова, Россия, г. Москва Andrei Pershin, qqq19975@yandex.ru
АННОТАЦИЯ
В условиях нестабильной экономической ситуации руководство многих компаний в процессе выстраивания эффективной финансовой стратегии ставит проблему поиска надежных новых способов привлечения средств. В настоящее время существует множество различных инновационных финансовых инструментов, которые работают в самых разных отраслях [4].
Одним из наиболее перспективных инвестиционных инструментов, способных решить проблему привлечения финансовых ресурсов, является мезонинное финансирование. Мезонинное финансирование — это гибрид кредита и прямых инвестиций. При таком типе финансирования инвестор не включается в капитал компании, а представляет деньги через долговые инструменты с одновременным приобретением опциона на приобретение акций заемщика в будущем по заранее определенной цене. Этот метод финансирования может снизить риски обеих сторон: долговые обязательства имеют более высокий приоритет в конкурентной очереди, что выгодно для венчурного инвестора, а опционное соглашение позволяет заемщику выплатить кредитору в будущем, выплачивая прибыль держателю опциона. или размещение акций в его пользу.
В мезонинном финансировании инвестор играет роль как кредитора, так и инвестора одновременно. Другими словами, мезонинное финансирование является временным финансовым инструментом для финансирования проектов. Инвестор, предоставивший мезонинный кредит, принимает на себя некоторые риски акционера, однако он может получить большую прибыль, поскольку до последнего момента он будет иметь право выбирать, использовать его опцион или нет. В России основной областью применения этого финансового инструмента являются рискованные и венчурные проекты. Основная причина этого заключается в том, что в случае банкротства
заемщика российское законодательство защищает кредитора больше, чем акционера.
ABSTRACT
In conditions of the unstable economic situation, the management of many companies in the process of building an effective financial strategy raises the problem of finding reliable new ways to raise funds. Currently, there are many different innovative financial instruments that work in a wide variety of industries
[4].
One of the most promising investment tools that can solve the problem of attracting financial resources is mezzanine financing. Mezzanine financing is a hybrid between a loan and direct investment. With this type of financing, the investor is not included in the capital of the company but represents money through debt instruments with the simultaneous acquisition of an option to acquire shares of the borrower in the future at a predetermined price. This financing method can reduce risks of both parties: debt obligations have a higher priority in the competitive queue, which is beneficial for the venture investor, and the option agreement allows the borrower to pay the creditor in the future by paying profit to the option holder or placing shares in his favor.
In mezzanine financing, the investor plays the role of both lender and investor at the same time. In other words, mezzanine financing is an interim financial instrument for project financing. Investor who provided the mezzanine loan assumes some of the risks of the shareholder, however, he can get a bigger profit, since until the last moment he will have the right to choose whether to exercise his option or not. In Russia, the main area of application of this financial instrument is high-risk and venture projects. The main reason for this is that, in the event of a bankruptcy of the borrower, Russian law protects the lender more than the shareholder.
Ключевые слова: финансовые инструменты, мезонинное финансирование, финансирование инновационных проектов.
Key words: financial instruments, mezzanine financing, financing of innovative projects.
Introduction
In the conditions of an unstable economic situation, the management of most enterprises in the process of developing an effective financial strategy faces a particularly urgent problem of finding sources of financing that can minimize investment risks, but at the same time, get an optimally high return on investments. Considering the fact that Russian economy needs to be developed faster than ever, which requires an increase of money attraction to the business, the problem of
choosing the best financial instrument for such investments is now more relevant than ever.
This article will focus on mezzanine financing - quite new for Russian business, but undoubtedly one of the most challenging. The main objective of the study is the consideration of this financial instrument in comparison with others and determine its potential for implementation in modern business.
Literature review
A lot of scientific articles are devoted to various factors affecting the selection of optimal financing conditions for various innovative projects. The problem of finding sources of financing that can minimize investment risks and optimize high return on investments is not a novelty in modern world. It was examined by large number of researchers.
However, financing problem for the companies was always crucial, especially in Russian conditions. Therefore, Russian financial researchers began to consider financial instruments of Western countries and use their experience to adapt the use of these instruments in Russian conditions. In order to understand this problem, it is necessary to analyze possible financial instruments for attracting investment, to understand their nature and prerequisites for use. For this purpose, the book of Ivasenko A.G.: "Investments: sources and methods of financing" was studied.
At the same time, in order to achieve the goal of my work, it is necessary to analyze the essence of specific financial instrument - mezzanine financing, its main features and advantages. For this purpose, I have studied the book of Andrew E. Baum and David Hartzell: "Global Property Investment" which contains fundamental information for understanding the essence of the functioning of mezzanine financing and its main "competitive" advantages in comparison with others.
Additionally, internet journal The Economist consists a lot of different articles dedicated to this theme. For further analysis of this problem, it is necessary to determine how this financial instrument is used among Russian companies nowadays. Ovanesova Yu.S. in her book - "Mezzanine financing as a new direction for Russia" perfectly reveals the current situation on the Russian mezzanine financing market and its main participants. Also, research of Pyrkova G.K complements and updates information on this theme.
Methodology
For the achievement of this research paper objective, the scientific studies on mezzanine financing released over the past 5 years were analyzed. The hypothesis of the research is that mezzanine financing makes it possible to attract larger amounts of borrowed funds than a classic loan, so that allows to add more options
for investment spreading by its sources and improve project and company performance. This hypothesis was proved by analyzing the current situation on the world mezzanine financing market and global practice of using this tool in specific investment cases. Also, hypothesis was proved empirically by the evaluation of this financial instrument economic efficiency.
The object of the paper is the is mezzanine financing, as a modern tool to provide funds for companies involved in innovative projects. The subject is the consideration of mezzanine financing perspectives in the context of Russian specifics. Secondary data was collected from the books dedicated to the financing tools and relevant scientific articles. Qualitative approach was used to estimate possible outcomes of implementation of the financial instrument described above and compare it with traditional investment resources for better understanding it's advantages and calculating of economic effect from its implementation in practice. Quantitative research method was used to reveal the current state of the mezzanine financing market. Generalization of information as well as its synthesis was done.
Findings
For consideration of this problem, it is possible to take the innovative sphere of the economy, as it is one of the most important areas of development of the country's economy as a whole, as well as one of the most risky, but at the same time attractive investment areas. The development of the innovation sector of the economy requires a large amount of investment, especially in the early stages of innovation projects. Currently, financing of enterprises suffers due to lack of own funds, lack of sufficient state financial support, high cost and riskiness of innovative projects, long-term payback period and conservative investors. For successful development of the company engaged in innovative activities has to solve two problems: optimize financial sources of new projects development and select innovative projects that can be profitable even in case of a crisis, which will ensure the distribution of risks.
The experience of foreign companies has shown that along with traditional methods of financing innovative projects, it is possible to raise funds using alternative tools such as mezzanine financing. Despite the fact that this financial instrument is widely used in Europe and the USA (approximately 30% of development projects and 40% LBO deals) [2], mezzanine financing is relatively rarely used in Russian business. Therefore, considering mezzanine financing as an alternative tool of financing innovative projects and identifying its benefits is a very relevant topic these days.
Mezzanine financing is a hybrid between a loan and direct investment. With this type of financing, the investor is not included in the capital of the company but represents money through debt instruments with the simultaneous acquisition of an
option to acquire shares of the borrower in the future at a predetermined price. Such a technique with stocks is called an «Equity kicker» [6]. This method of financing can reduce the risks of both parties: debt obligations have a higher priority in the competitive queue, which is beneficial for the venture investor, and the option agreement allows the borrower to pay the creditor in the future by paying profit to the option holder or placing shares in his favor. Mezzanine financing is an excellent option for companies that can no longer attract bank financing [1].
In mezzanine financing, the investor plays the role of both lender and investor at the same time. In this case, he receives risks significantly higher than a conventional loan, and accordingly expects a higher return on investment. At the same time, when repaying a mezzanine loan, it is easier for shareholders to buy an option, since:
• the main debt is on the balance sheet of the company;
• buyback price is significantly lower;
• repurchase share is lower than with direct investment.
At the same time, this type of financing provides greater security for the investor, since he will also be responsible for the profit received by the company if the project yields a result lower than expected [4]. Using this method of investing, the investor usually focuses on the average level of risk: higher than in the case of debt financing, but lower than in the case of equity investment. In the same way, the cost of mezzanine financing is determined. Mezzanine investors are usually: pension funds, hedge funds, private equity funds, insurance companies and banks. Using mezzanine financing, the main goal of an investor is to return to primary investments and increase his capital, rather than seizing power over a company. Thus, borrowers choosing the mezzanine method of financing their projects receive the following advantages compared to classical lending: rating growth due to increase in equity, taxation of funds as borrowed, deferral of debt repayment.
At the same time, the maximum possible profit of a shareholder is higher than the maximum profit of a creditor who receives his fixed percentage. In other words, mezzanine financing is an interim financial instrument for project financing. Mezzanine debt will be recovered earlier than the equity debt, but later than the loan debt. It turns out that the investor who provided the mezzanine loan assumes some of the risks of the shareholder, however, he can get a bigger profit, since until the last moment he will have the right to choose whether to exercise his option or not
[3].
In turn, this method of lending is beneficial for banks due to the fact that the yield on such loan portfolios is higher than on ordinary. With reference to the foregoing, it is obvious that mezzanine financing makes it possible to attract larger
amounts of borrowed funds than a classic loan, since it allows to distribute the risks in such a way that it is beneficial for the lender to provide larger loans that have a higher profitability, which are also additionally protected by the option. To confirm the hypothesis of this research, it is necessary to evaluate economic efficiency of this financial instrument. For this purpose, I calculated the possible results of the project, depending on the share of leverage in the initial investment. Table 1 represents these calculations and shows a comparison of various combinations of the initial investment composition.
Table 1.
Calculation of possible project outcomes
No Leverage
Equity 1 000 000
Debt -
Total Capital 1 000 000
Cash Flow (after
total debt (1 000 350 350 350 350 350
expense) 000) 000 000 000 000 000
IRR 22%
Moderate
Leverage
Equity 750 000
Debt 250 000
Interest 10%
Total Capital 1 000 000
Cash Flow (after
total debt (750 295 295 295 295 295
expense) 000) 000 000 000 000 000
IRR 28%
High Leverage
Equity 500 000
Debt 500 000
Interest 20%
Total Capital 1 000 000
Cash Flow (after
total debt (500 230 230 230 230 230
expense) 000) 000 000 000 000 000
IRR 36%
As can be seen from the calculations, a greater leverage, even with an increased interest rate, provides a better internal rate of return, which indicates greater efficiency of the project as a whole. For the borrower, this option is most beneficial due to the optimization of cash flows. In turn, the lender receives an investment of funds with greater profitability and their relative security with the option. Thus, mezzanine financing is a so-called "win-win" transaction.
In Russia, the main area of application of this financial instrument is high-risk and venture projects. The main reason for this is that, in the event of a bankruptcy of the borrower, Russian law protects the lender more than the shareholder, since, given the bankruptcy of the company, loans are repaid in the first place, and stock funds - in the last [3].
Conclusion
The mezzanine method of financing can reduce the risks of both parties. Debt obligations have a higher priority in the payment queue, which is beneficial for the investor, and the option agreement allows the borrower to pay the creditor in the future by paying profit or issuing shares in his favor. Despite the above advantages of mezzanine financing, this financial instrument has not yet gained wide popularity in our country and is still in its infancy, unlike in Western countries.
All of the above shows that mezzanine financing can be considered as an alternative way of attracting financial resources if other forms of lending, in particular bank lending (in case of already existing high debt, project risk, etc.) are unavailable for the company, if there are financial opportunities to maintain additional long-term loans and borrowings.
Undoubtedly, mezzanine financing is a new product for the Russian market. Nowadays, the main positions on this market belong to banks, as well as venture funds and private equity funds. The expansion of the use of this tool in Russia depends primarily on improving the overall investment climate in the country, stabilizing the situation in the financial markets and the general level of interest rates on loans and borrowings.
References
1. Ovanesova Y.S. Mezzanine financing as a new direction for Russia //
Management Accounting and Finance. - 2015. - No. 4.
2. Andrew E. Baum and David Hartzell Global Property Investment: Strategies, Structures, Decisions 1st Edition, Wiley-Blackwell - January 17, 2016.
3. Pyrkova G.K. Mezzanine financing as a source financing at the present stage of entrepreneurial development activities in the Russian Federation // Russian Entrepreneurship. - 2017.
4. Charaeva M.V. Study of strategic directions of investment activity of Russian enterprises // Financial analytics: problems and solutions. - 2015. - No. 36.
5. New Russia Growth. [Electronic resource]. URL: http: //www.nrgc.com.
6. The Economist. [Electronic resource]. URL: https://www.economist.com
Литература
1. Ованесова Ю. С. мезонинное финансирование как новое направление для России / / Управленческий учет и финансы. - 2015. - Вып.4.
2. Эндрю Э. Баум и Дэвид Хартцелл глобальные инвестиции в недвижимость: стратегии, структуры, решения 1-е издание, Wiley-Blackwell-17 января 2016 года.
3. Пыркова Г. К. мезонинное финансирование как источник финансирования на современном этапе развития предпринимательской деятельности в Российской Федерации / / Российское предпринимательство. - 2017.
4. Чараева М. В. Исследование стратегических направлений инвестиционной деятельности российских предприятий / / Финансовая аналитика: проблемы и решения. - 2015. - Постановление № 36.
5. Рост Новой России. [Электронный ресурс]. URL: http: //www.nrgc.com-да.
6. экономист. [Электронный ресурс]. URL: <url> https://www.economist.com
