Mezzanine Financing

When you need capital beyond what your senior lenders will extend, look no further than mezzanine.
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What is Mezzanine Financing?

Hear Mark Hoffmeister, Matthew Harvey, Steve Szejner, and Julie Langdon share how mezzanine can transform businesses.
Mezzanine financing is a capital resource that sits between senior debt and equity in the capital structure and features the best of both worlds. When companies have maximised their senior debt borrowing capacity, and want to raise additional capital without depleting future senior debt capacity, they are typically left with two options: raise outside equity or utilise mezzanine financing.

From a structural standpoint, mezzanine financing is subordinate to senior debt, and does not usually require any amortisation prior to maturity. With a 7-8-year bullet maturity, mezzanine is what we call patient capital – meaning that it supports growth, while also being less costly than direct equity issuance. A mezzanine-supported recapitalisation is also an attractive alternative to an outright sale of the business or an equity raise, enabling owners to maintain control.

While it’s certainly not as well-known as other types of capital, we think you’ll find mezzanine to be an option well worth being acquainted with – and we can help you with just that.
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Businesses come in many forms. Shouldn't your capital do the same?

“We have locations around the globe, but each office feels very local and specific to its surrounding culture. This has enabled us to get a good grasp on a variety of markets, and puts our partners at ease.”

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Typical size
  • US$10 million - US$100 million
Typical uses
  • Recapitalisations
  • Growth capital
  • Leveraged buyouts
  • Management buyouts
  • Acquisitions
  • Shareholder buyouts
  • Refinancings
  • Balance sheet restructurings
Structural characteristics
  • Typically, subordinated debt with attached equity warrants
  • Principal repaid after senior debt has been fully amortised
  • Combination of cash coupon and deferred interest
  • Nominal warrants representing minority stake in issuer
Issuer benefits
  • Patient capital
  • Maintain control of the business
  • Fund growth goals or other needs beyond what their senior debt capacity will allow

Transformation Capital

Enabling Companies to Leapfrog to the Next Level
The Pricoa Private Capital Guide to Mezzanine Financing
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Portfolio Companies
We have an investment portfolio of US$5.6 billion in mezzanine finance as of 30.9.20.
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Pricoa Private Capital (‘PPC’) is a trading name of PGIM, Inc. (‘PGIM’), the principal asset management business of Prudential Financial, Inc. ('PFI'). Pricoa Private Capital registered in Ireland as PGIM Private Capital (Ireland) Limited, Pramerica Drive, Letterkenny Business and Technology Park, Letterkenny, Co Donegal, F92 W8CY, Ireland. Registered in Ireland under company number: 635793. Authorised and Regulated by the Central Bank of Ireland. In the United Kingdom (UK), and various other jurisdictions in Europe, certain investment activities are undertaken by PGIM Private Capital Limited, authorised and regulated by the Financial Conduct Authority, (registration number 172071). PGIM Private Capital Limited is registered in England No. 1331817. The registered office is Grand Buildings, 1-3 Strand, Trafalgar Square, London WC2N 5HR. PPC, Pricoa, PGIM and the Rock symbol are service marks of PFI and its related entities, registered in many jurisdictions worldwide. PFI of the United States is not affiliated in any manner with Prudential plc, incorporated in the United Kingdom or with Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom.

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