Sourcing Equity Internationally
This article explores the intricacies of equity financing on a global scale, examining which countries are optimal for issuing equities and the implications of market segmentation. It highlights the financing approaches of U.S. and European companies, focusing on the reliance on internal cash generation versus seeking external funding. We discuss the factors influencing equity issuance, including currency and market structure, as well as the impact of globalization on capital markets. Understanding these dynamics is crucial for companies looking to raise equity efficiently.
Sourcing Equity Internationally
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Presentation Transcript
Equity Financing • In which countries should equities be issued?
Equity sourcing Company funding from external sources: U S and European companies rely on internal cash generation
Equity Financing Issues: • Country of issue • Currency of issue • Segmented capital market or integrated market?
Equity Financing Who is going to raise the equity? • Parent or subsidiary? • Who are the main beneficiaries of access to global capital markets?
Capital Market Segmentation A national capital market is segmented if the required rate of return on securities in that market differs from that of comparable securities that are traded on other national securities market, after adjusting for foreign exchange and political risks.
Capital Market Segmentation What causes market segmentation in a financial market?
Efficiency in a segmented market Activity 1 How can an efficient securities market in a domestic context be segmented in an international context?
Globalisation of financial markets • Competition • Deregulation • Lower issuance costs
Globalisation of financial markets Activity 2 What are euro equity issue?
