Preferred equity
Equity with specified preferences relative to common equity at the same issuer, such as dividend or liquidation rights. Priority, accrual, participation and redemption depend on the terms and entity structure; creditor claims generally precede equity claims at that issuer.
Also called Preferred shares, Preferred stock
Preferred equity in round numbers
Hypothetical US$ millions: preferred equity of 15 has a stipulated 12% annual paid in kind (PIK) return capitalized after one year. With no distributions, redemptions or other changes, first-year accrual is 1.8 and the contractual preference becomes 16.8. Issuance and payment must still comply with governing and financing documents.
Terms Related to Preferred equity
Mezzanine · Liquidation preference · Redeemable (straight) preferred · Sweet equity & envy ratio · Common stock · Participating preferred · Term sheet · PIPE · All of the glossary