Mezzanine

As a hybrid form of equity and debt capital, mezzanine (also called hybrid financing or hybrid capital) allows capital to be injected even when traditional borrowing capacity is already exhausted. Mezzanine allows you to take advantage of the benefits of equity without having to share voting rights – provided that this flexible financing option has been structured accordingly. Mezzanine is particularly attractive for growth financing of medium-sized companies.

Advantages

Fresh liquidity without collateral

High flexibility in repayment, interest rates, etc.

Balance sheet advantages of equity capital without having to share voting rights

Mezzanine can be structured in many different ways – ranging from the silent partnership to convertible bonds. Sometimes the devil is in the detail when determining whether mezzanine is treated as debt or equity capital for accounting and tax purposes. Let us advise you on what suits you best and which mezzanine financier offers the best conditions.

Mezzanine: The best of both worlds

Profit participation certificates, hybrid and option loans, silent equity capital, subordinated loans, shareholder loans – mezzanine capital comes in many forms. The most important characteristic of mezzanine capital is its ranking position in between voting equity and senior debt. Mezzanine has copied the subordination feature from equity: In an insolvency, secured creditors are satisfied first, who also usually have access to hard collateral. A debt feature in turn are the restrictions of no or only very limited rights of say – and that the mezzanine capital must be repaid at the end of an agreed term.

Mezzanine providing access to other traditional loans

The equity character extends the financing scope beyond direct mezzanine. This is because mezzanine changes the ratio of equity to debt on the balance sheet and thus can also allow bank lenders to provide fresh capital. Prior to including mezzanine, this may no thave been possible for the banks for regulatory reasons. For example, for every 1 euro of mezzanine could allow for 2 more euros of new loans to be raised.

Although mezzanine is standard practice in buy-outs of larger companies, in particular in the private equity sector, younger and dynamic medium-sized companies also use this form of financing to finance larger investments and rapid growth. Minimum amounts usually start at 5 million euros per mezzanine financing. Mezzanine providers are usually specialised Private Debt funds [more here: Private Debt] or institutional investors such as insurance companies – and last but not least the respective departments of some banks.

However, the higher risk for the creditors comes at a price increase compared to senior debt. Typical interest rates are higher than those for “standard” loans, and flexible profit-sharing mechanisms are often added to this.

The

  • comparatively long tenors of usually seven to ten years,
  • the flexibility in the structuring and above all
  • the possibility of still raising new funds, if bank capital is exhausted
  • without further collateral and concessions on rights of co-determination / shareholder rights

are good reasons for mezzanine.

Christian Wolber

Christian Wolber

Head of Debt Advisory
+49 651 98127-127
Languages: German / English / Spanish

Personal Info

Personal Info

Viktor Margaritopoulos

Degree in business administration

Born 1980, partner, 1 child

A successful 15-year career in sales and consulting, working in the insurance, manufacturing, banking, financial sectors for companies including Deutsche Bank Privat und Geschäftskunden AG and Euler Hermes Deutschland.

Mentor and lecturer for insurance and business administration at DHBW Mannheim, as well as other higher-education establishments.

Member of the insurance committee at the Saarland Chamber of Industry and Commerce.

Member of Arbeitskreis Wirtschaft e.V..

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Alfons Maria Gracher

married, three children

Trained bank clerk, degree in business administration and, since 2000, managing partner of Gracher Kredit- und Kautionsmakler GmbH und Co. KG, Germany’s largest surety service provider.

An expert in his field and a member of the Chamber of Industry and Commerce (IHK) finance committee, he is consulted on such matters as the implementation of European Commission directives and regulations.

He is also a co-founder and board member of (the international credit broker association) BARDO e.V., established in 2013, and heads its surety committee. As a founding member of Surety Alliance, he is well-connected internationally.

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Özay Süerdem

Following his apprenticeship as a banker at SEB, Mr. Süerdem completed his bachelor’s and master’s degree at FOM in ‘Business Administration’ (focus: Finance) as well as ‘Finance & Accounting’ in Cologne. During this period, Mr. Süerdem worked in various positions in banking and financing industry of banks and financial institutions as senior consultant, credit analyst, customer consultant and sales assistant.

Most recently, Mr. Süerdem worked for Big4 companies in consulting and auditing the credit business of banks. In addition to various credit-related consulting projects, his primary tasks included the risk assessment of complex credit engagements (especially project & leveraged finance). At Gracher, Mr. Süerdem is a specialist in all aspects of corporate financing and works closely with Mr. Wolber. His field of activity includes both analysis and consulting activities.

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Luba Nikiforova

Dipl. Economist, born 1981, 1 child

Studied Economics with a focus in Finance at the Ruprecht-Karls-University Heidelberg followed by a MSc in European Politics and Governance at the London School of Economics and Political Science.

For 15 years working as a business development expert in various fields in Bulgaria – electricity trading, renewable energy, energy efficiency, EU financing. Was responsible for the optimization of electricity costs for an energy-intensive industrial company, which became the first Bulgarian industrial consumer to cover its own electricity needs through active electricity trading activity and thus achieved significant financial savings.

Since May 2020 working at Gracher in developing surety sales for the Bulgarian market.

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Tina Weidenaar

After finishing the school for business administration and economics (HEAO) with a specialization in Banking and Insurance, Tina obtained her master’s degree in law. She started her working career in the financial sector in the compliance department at Fortis Investments, the asset manager of Fortis.
Holding various other legal and commercial positions within the financial sector after that, Tina became a relationship manager at the Dutch surety company Nationale Borg in 2004.

Here she gained more than 11 years of valuable experience as a surety underwriter and was responsible for a portfolio of companies, consisting of both large SMEs and (international) listed companies.

Since 2016 Tina leads the Dutch office of Gracher, Gracher Surety Netherlands, focusing on developing the Dutch market as well as international business from Non German speaking countries.

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André Ofenloch

born 1974, partner, two children

Qualified insurance broker and degree in business administration.

André Ofenloch began his carrier as an analyst and underwriter in 1993, working in the Creditline division of Allgemeinen Kredit AG (later Coface Deutschland AG). In 2003, he moved to Coface’s new factoring subsidiary Coface Finanz GmbH, starting out as an account manager in commercial factoring. From 2006 onwards, he became the authorized head of the Business Development, Institutional Clients/Refactoring and Reverse Factoring divisions. In 2014, he was made head of sales for the company’s factoring business, managing a 15-strong decentralized sales team up until the end of 2018. Parallel to this, he also became head of the newly established New Client Structuring and Onboarding division, where he remained until the end of 2019.

At Gracher, Ofenloch oversees the factoring and receivables & purchase financing business. In addition to a wealth of experience drawn from a long career in financing and credit insurance, Ofenloch also has an extensive network of contacts in credit insurance, factoring, banking and purchase order financing.

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Oleg Narykov

BA French philology, MSc Economics

single

After successfully completing a degree in French philology, with a minor in economics, Oleg Narykov completed an English-language Masters in Economics at the University of Trier, specializing in econometrics and time-series analysis.

During his studies, he gained international experience at the Namur and Louvain-la-Neuve universities in Belgium.

Since May 2017 he has been working in Luxemburg’s financial center.  

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Kontantin Narykov

Coming soon…

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Edwin Jacobs

Coming soon.

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Christoph Spuller

Coming soon.

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Wolfgang Bäumer

After graduating from high school, trained as a bank clerk at a savings bank, where he was subsequently employed in the bank’s credit department.

He then studied law in Bonn, passing the bar, and went on to work in Deutsche Bank AG’s corporate banking division.

From here, he moved into property leasing at subsidiaries of Dresdner Bank and Commerzbank and was responsible for structuring and financing numerous large projects – focusing, in particular, on compliance with international accounting rules.

Joined Gracher in 2013, focusing on the construction industry and property developers.

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Carl E Hoestermann

Attorney

born 1961, married, 3 children

1992 Deutsche Bank management trainee program in Frankfurt and subsequent role as assistant to the board of management at the Duisburg branch. Thereafter, branch director of two large Deutsche Bank branches.

At the end of 1997, moved to HOCHTIEF AG in Essen as Head of Corporate Finance, Investor Relations and Asset Management. Responsibility for numerous projects, both national and international.  From 2004 onwards, also Deputy Chairman at HOCHTIEF Pension Trust e.V., the group’s investment vehicle for financing German pension liabilities.

Longstanding management and project experience at international level, including negotiation of high-volume surety facilities for operating subsidiaries in the USA and Canada.

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Christian Wolber

After training as a bank clerk, Wolber obtained a Bachelor in International Business in Maastricht, completing part of the course in Ecuador. He also completed a Masters in Banking & Finance at HSG St. Gallen.

He then spent 12 years in London, initially at Barclays Capital and then at Citigroup. At both institutions, he worked in leveraged finance, structuring and placing financing solutions for corporate and private equity clients. He then moved to Ondra Partners (also in London) where he worked in debt advisory.

Wolber now heads Gracher’s finance consulting business. In addition to his longstanding experience within the financing sector, he also has an extensive network of contacts among financing partners – banks, credit funds (private debt), mezzanine financing providers, and a wide variety of alternative credit providers.

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Horst Wingenter

Coming soon.