Abstract

Mezzanine financing belongs to unconventional financing methods. It uses hybrid instruments and can take various forms. It has both a debt and an equity component. Its characteristic feature is the subordination to the main debts, thanks to which the financed entity does not deteriorate its ability to incur other debts. This circumstance, however, is
associated with higher risk borne by the investor, who in exchange for it, thanks to the socalled equity kicker, will naturally expect a higher return than with traditional financing methods. Addressees of mezzanine financing are developing companies or in a difficult financial situation that have the potential to generate profits in the future. Mezzanine is a type of private equity. This solution provides many benefits for participating parties, including tax benefits, resulting from the rule shopping strategy. It can be used in many industries, including banking. The main motivation to use it may be the desire to lower the interest coupon accompanying other financing methods.