Glossary
A
- Add-on acquisition
- a shareholding acquired in another enterprise, which improves existing operations without major restructurings or changes
- Associate
- undertaking in which Gimv has significant influence over the financial and operating policies, but which it does not control
B
- Bank deposit
- money placed by an investor with a bank at interest for a pre-determined, fixed period
- Bid price
- the best price offered for a security
- Blue chip
- a company that is well known and financially reliable.
- Buy-and-build
- enlarging an enterprise by buying up and combining companies, producing operational and strategic synergy advantages which result in greater profit
C
- Call option
- an option that gives the buyer the right to purchase the underlying security at a pre-set price at a future date
- Carried interest
- the share of the profit that is paid to the management of a private equity fund
- Closed-end fund
- a fund consisting of a fixed number of issued shares. The price of the share is determined entirely by offer and demand. The fund manager cannot decide to buy-in shares if there are too many on offer, nor can he issue new shares in a situation of heavy demand
- Corporate Governance
- rules and behaviours constituting good governance that companies need to adopt and for which they must give account (Belgian Corporate Governance code - www.corporategovernancecommittee.be)
- Covenant
- a financial performance requirement placed on a borrower, generally in terms of debt or profit or cash flow ratios, which if not met, can trigger the early repayment of a loan
D
- Default rate
- ratio of debtors which are no longer able to repay their loans. This ratio is viewed by investors as an instrument for determining their risk, and by economists for assessing the health of the economy
- Discount
- In the case of a holding company: the negative difference between the price at which a share or bond in the holding company is trading and the share in its assets that that share or bond represents. If a share is trading at EUR 45 and represents a EUR 50 share in the holding company’s assets, then it is trading at a discount of EUR 5
- Distressed debt
- situation in which a company’s debt level has run too high and is jeopardising the development of future activities
- Due diligence
- the in-depth analysis and assessment of the commercial, legal, financial, technical and environmental aspects of a company targeted for investment.
E
- Early stage financing
- financing of companies which have developed their products, but need additional financial resources to bring them to market and sell them. Companies at this stage are not yet developing profits
- EBITDA
- earnings before interest, taxes, depreciation and amortisation = operating cash flow
- Equity consolidation
- consolidation method whereby the net carrying value of an enterprise is replaced with the share held in capital and reserves
- Ex-date dividend
- closing date a few days before payment of the dividends, after which a newly purchased share is not entitled to the upcoming dividend
- Exit
- the termination of an investment as private equity investor by means of IPO, trade sale or secondary buy-out
F
- Fair value
- the value at which the investment could be sold at the reporting date to an interested and independent buyer if the seller was ready to divest of this investment at the particular point in time
- Follow-on investment
- investment in a company that has already received venture capital financing
- Free float
- the portion of a company’s share capital that is freely negotiable on the stock market.
G
- Growth financing
- capital that is invested in an expanding company. These funds can be used to increase production capacity, for product development, for marketing or to provide additional working capital.
I
- IFRS
- International Financing Reporting Standards (www.ifrs.com)
- Initial Public Offering
- the introduction (flotation) of a company onto a stock exchange
- In the money
- an option is in the money when a profit can be made from exercising it. Call options are 'in the money’ when the exercise price is lower than the price of the underlying security. Put options are 'in the money’ when the exercise price is higher than the price of the underlying security
- IPO
- (Initial Public Offering)the introduction of a company onto a stock exchange
- IRR
- (Internal Rate of Return) the return on a yearly basis on an investment.
J
- Joint venture
- a form of cooperation in which two or more organisations found a new undertaking to jointly develop (new) activities
L
- LBO
- (Leveraged Buyout) is a financing method whereby a company is acquired mainly with borrowed money, which has to be repaid later by the acquired company, and with the assets of the acquired company serving as collateral
- Lead investor
- the investor in a private equity financing round that makes the largest investment and is the most involved in the financing project
- Leverage
- the degree of debt financing of a takeover
M
- Majority shareholdings
- companies in which Gimv holds a majority share and which are fully consolidated in the statutory consolidation. Gimv's risk is limited to its investment in these enterprises.
- Management buyout
- financing where a company’s existing management takes over a company together with an external financier.
- Management buyout (MBO):
- financing where a company’s existing management takes over a company together with an external financier
- Management letter
- the report by a company’s external auditor to the board of directors (or supervisory board) covering both the management and the administrative organisation of a company or organisation
- Market capitalisation
- the total stock exchange value of a company, i.e. the share price times the number of shares outstanding of a public company
- Mark-to-market
- accounting rules for establishing the value of financial enterprises, based on the current financial situation
- Mezzanine financing
- financing with subordinated loans or convertible bonds. The risk level of this type of financing lies midway between equity and bank debt
- Multiple
- the result of comparing two parameters like cash flow or profits with each other, used to measure the health of an organisation. Can also serve to measure the return on an investment
N
- Notional interest deduction
- companies are allowed in Belgium to deduct a fictional interest charge from their profit, also referred to as ‘risk capital deduction’
P
- Payment date
- date on which the dividend is paid out
- Payout ratio
- the percentage of net earnings paid to the shareholders.
- PIPE transaction
- (Private Investment in Public Equity): a transaction in which a private equity investor takes a shareholding in a listed company
- Private equity
- investment in non-listed companies
- Put option
- an option that gives the buyer the right to sell at a pre-set price at a future date
Q
- Quasi equity
- subordinated loan in which a creditor agrees to (an)other creditor(s) that his claim on their joint debtor will be repaid only after the debt to the first creditor(s) has been (partly or fully) repaid
R
- Ratchet
- an incentive mechanism whereby a well-performing management receives an additional bonus in the form of shares
- Record date
- dividends are paid out to shareholders which are registered on the ‘record date'. No dividends are paid on shares not registered on the record date
- Risk capital
- see venture capital
S
- Secondary buyout
- an exit formula by which an investment company sells its shareholding in a company to another venture capital provider
- Secondary fund
- a fund that either buys a portfolio of direct investments from an existing private equity fund or limited partner positions in these funds
- Spin-off
- company set up on the basis of a technology transfer, in particular technology coming from a university or higher education institution
- Spin-out
- the splitting off of a part of a company to form an independent company. Spin-outs occur frequently when companies in the traditional economy want to become part of the new economy
- Subordinated loan
- a loan which, in a bankruptcy situation, is repaid only after all other creditors have been repaid
- Subsidiary
- company that is owned for more than 50 percent by Gimv, the parent company. These companies (not including the majority shareholdings) are consolidated in the limited consolidation
T
- Trade sale
- the sale of a shareholding to an industrial party rather than via the stock market
- Treasury investments
- a collective name for short-term securities which are traded on the money market. These are issued by major corporations and certain governmental authorities. Corporations wishing to issue treasury certificates need to fulfil specific legal and financial requirements
- Turnaround
- restructuring with the goal of bringing operations back to health or making them healthier
V
- Venture capital
- capital financing of young, fast growing companies
- Vintage
- the starting year of an investment company or the year of the setting up of the first fund
- VPF agreement
- (Virtual Print Fee) an agreement whereby the film studio commits to pay a certain remuneration per booking to the integrator (like XDC), when specific conditions are met
W
- Warrant
- a negotiable right to acquire new shares from the issuing institution during a certain period at a specified price