(Share Sell Down)
A capital raise or share sell-down refers to a process through which a company raises funds by selling a portion of its ownership (shares) to investors. Companies typically do this to finance their growth, invest in new projects, or pay off debt.
In a capital raise, a company may issue new shares of stock or sell existing shares held by the company's founders, executives, or other shareholders. The shares are typically sold to institutional investors, such as private equity firms, venture capitalists, or mutual funds, or to retail investors through a public offering.
The price of the shares is determined by the market demand, the financial performance of the company, and other factors. Companies may also offer incentives to investors, such as discounts on shares or special voting rights.
Capital raises can be a significant event for companies, as it can provide them with the necessary funding to pursue growth opportunities. However, it can also dilute the ownership stake of existing shareholders, and the success of the capital raise is dependent on the market's willingness to invest in the company.