pääomitus

Pääomitus is a Finnish term that translates to capitalization or recapitalization. It refers to the process of a company issuing new shares or other equity instruments to raise capital. This can be done to fund expansion, cover losses, or strengthen the company's financial position. Pääomitus can take various forms, including issuing new shares at a premium, rights issues, or private placements.

The primary goal of pääomitus is to increase the company's equity base. This can improve solvency ratios, reduce reliance on debt financing, and enhance the company's ability to secure future funding. For publicly traded companies, a successful pääomitus can lead to a higher share price, as investors may perceive the company as being on a stronger financial footing.

There are several reasons why a company might undertake pääomitus. Growth opportunities often require significant investment, and issuing new shares is a common way to finance these initiatives. If a company has experienced financial difficulties or accumulated losses, pääomitus can be used to restore its equity and improve its balance sheet. It can also be a strategic move to acquire another company or to prepare for a merger or acquisition.

The process of pääomitus typically involves the company's board of directors proposing the capital increase, which is then usually subject to shareholder approval at a general meeting. Regulatory requirements must also be met, particularly for listed companies. The cost of pääomitus can include underwriting fees, legal expenses, and the administrative costs associated with issuing new shares.