29 Equity finance

‘If companies are able to raise equity from the market, then their problems for financing incomplete projects will come to end. Investment cycle in the capital market can kick-start with the money of savers and investors.’

Uday Kotak, executive vice chairman and managing director of Kotak Mahindra Bank

In a nutshell

Equity finance is money (‘capital’) raised by the sale of shares to investors (shareholders) who become owners with voting rights in the company, in return for their investment.

Equity is often a more expensive way to finance a business because shareholders require high rewards as compensation for risk. Shareholders suffer the highest risk because there is never a guarantee of return and no security is provided ...

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