How Can A Public Limited Company (PLC) Raise Capital?

Methods for Raising Capital for Public Limited Companies

1. Initial Public Offering (IPO): An IPO is the transition of a privately held company to a public one, achieved by issuing new shares and selling them to investors through a stock exchange.

2. Secondary Offering: PLCs have secondary offerings - more shares in follow-on offerings to the public and discounted shares for existing shareholders in rights issues.

3. Debt Financing: PLCs raise capital through debt instruments like bonds, which investors purchase. The company makes interest payments and repays the principal at maturity, offering an alternative to equity financing for funding operations or projects.

4. Preferred Stock Issuance: PLCs issue preferred stock, offering fixed dividends and priority in liquidation. It raises capital without diluting common shareholders' equity.

5. Private Placements: PLCs often conduct private placements, selling shares or securities to a chosen group of private investors or institutions, allowing them to raise capital with fewer regulatory requirements compared to a public offering.

6. Venture Capital and Private Equity: PLCs seeking growth capital can partner with venture capital or private equity firms, trading ownership stakes for funding, with private equity often involving active management and strategy input.

7. Retained Earnings: PLCs can make use of retained earnings, which are profits not paid out as dividends, to fund internal growth and development by reinvesting them into the company.

8. Asset Sales: PLCs can generate capital by divesting non-core assets or subsidiaries, a strategy that releases funds for the core business or strategic initiatives.

9. Crowdfunding: Certain PLCs may consider using crowdfunding platforms to secure capital from numerous small investors, though this approach is less typical for PLCs and is more suitable for specific types of businesses.

10. Strategic Alliances and Joint Ventures: PLCs can enter into strategic alliances or joint ventures with other companies to access capital and resources for specific projects or collaborations," stated the reference material.

11. Loans and Credit Facilities: PLCs can secure loans and credit facilities from financial institutions to meet short-term funding needs or to finance specific projects," mentioned the reference material.