A type of funding capital midway between debt and equity in that it offers a higher interest rate than senior debt, but provides a lower longer-term return than equity. This allows large deals to be structured in the most suitable method for investors and lenders. Often used in management buyouts.
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mezzanine finance UK US noun [U] (also mezzanine financing)
► FINANCE a form of lending to businesses in which a company that is borrowing pays a higher rate of interest than on other loans but has longer to pay back the debt, which may also be changed into shares in the company: »
The 50-50 joint venture with Bank of Scotland will comprise about 20 per cent equity and the rest in debt and mezzanine finance.
Financial and business terms. 2012.