Private Equity

Investments of an equity interest in a privately held company

Security Type

When a company decides fund raising, there are different types of financial instruments to be used, which best suits its imminent as well as long-term aim and goals.

[Table] Comparison: CB vs. CPN vs. RCPS

Category	Convertible Bond (CB)	Convertible Promissory Note (CPN)	Redeemable Convertible Preferential Shares(RCPS)
Definition	A debt security that can be converted into a predetermined number of shares of the issuing company.	A short-term debt instrument that can be converted into equity at a later date.	A type of preferred stock that can be converted into common stock at the option of the holder.
Interest Rate	Typically lower than regular bonds due to conversion feature.	Usually lower than traditional loans, but higher than convertible bonds.	No interest payments; dividends may be paid.
Maturity Date	Fixed maturity date; typically 5-10 years.	No fixed maturity date; usually convertible upon certain events.	No fixed maturity date; typically redeemable at the issuer's option.
Conversion Price	Set at issuance, usually at a premium to current stock price.	Set at issuance, often with a discount to current stock price.	Set at issuance, often with a premium to current stock price.

Source: Various sources