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Capital for growth-oriented companies

Credit Suisse is launching CSA Mezzanine and PREPS TM to support SMEs Credit Suisse is offering two new alternative forms of corporate financing to help both Swiss SMEs and larger companies obtain quasi-equity resources more easily. By providing these innovative financing instruments, CSA Mezzanine and PREPS TM (Preferred Pooled Shares), Credit Suisse is meeting the demand of many companies for growth financing options which do not affect their ownership structure. Both instruments are granted exclusively as subordinated loans. At the same time, this represents an attractive investment segment for investors.

Besides equity capital, the traditional bank loan remains an important source of corporate financing throughout Switzerland. Generally, SMEs are largely financed by bank loans. However, it is difficult for many companies to finance their expansion plans since the majority cannot access the capital market. A stock market flotation is only a viable option for a lucky few and the route to acquiring venture capital is strewn with obstacles. In addition, banks only provide venture capital in exceptional cases and, because of due diligence and risk considerations, cannot replace depleted equity capital resources with larger loans.

Mezzanine financing remedies financial shortfalls in SMEs
Credit Suisse aims to help companies procure growth capital and is, therefore, offering CSA Mezzanine and PREPS TM as alternative forms of corporate financing, which are unique in Switzerland because of their innovative structure.

The origin of the word "mezzanino" lies in Italian architecture and denotes a floor between two main flours. Mezzanine financing covers financial shortfalls that cannot be alleviated by equity capital or borrowed capital.

CSA Mezzanine for SMEs
The CSA Mezzanine financing from Credit Suisse has a term of five to eight years. CSA Mezzanine is geared toward Swiss SMEs that generate sales of approximately ten million francs and a funding requirement ranging between 0.5 and 5 million francs. Companies can use this instrument to finance an expansion, a management buyout or regulate their successor planning.

CSA Mezzanine financing from Credit Suisse is exclusively issued in the form of subordinated loans from Credit Suisse Investment Foundation (CSA). The investors in Credit Suisse Investment Foundation - pension funds - can tap into an alternative investment segment thanks to Mezannine financing. Credit Suisse Asset Management (CSAM) is the portfolio manager of Credit Suisse Investment Foundation.

PREPS TM for larger companies
PREPS TM (Preferred Pooled Shares) is an innovative securitization platform by means of which larger companies can procure economic equity capital (subordinated debt) indirectly on the capital market. The transaction platform enables companies with sales totaling approximately 50 million francs to procure quasi-equity resources. The Euro is always the reference currency. PREPS TM has a seven-year term and is suitable for companies with funding requirements of between three and fifteen million euros.

Furthermore, PREPS TM provides both institutional and private investors with the opportunity to invest in small and larger companies in a broadly diversified manner, which, up to now, was only possible on the capital market.

The PREPS TM concept for Switzerland was developed in collaboration with the Capital Efficiency Group (CEG) in Zug, which had already nurtured the concept and successfully launched it on the German market. Credit Suisse has exclusive distribution rights within Switzerland.

Significance of corporate client business
Both these innovative forms of corporate financing constitute a win-win situation for all parties involved. Firstly, with CSA Mezzanine and PREPS TM , Swiss SMEs and larger companies can obtain alternative financing that is similar to equity capital, provided that they have a credit rating equivalent to investment grade. Secondly, investors benefit from an alternative and attractive investment segment.

By offering CSA Mezzanine and PREPS TM , Credit Suisse is not only addressing the difficulty many companies face in procuring growth capital and consolidating its position in the Swiss corporate business segment, but it is also helping to bolster small and medium-sized businesses, which are the most important performers in the Swiss economy.