Optimising debt and equity investment in a subsidiary

Financial and insolvency analysis plays an important part in determining the optimum mix of debt and equity investment in a subsidiary, especially in situations in which regulatory concerns on subsidiary investment are important. 

One example is with the unregistered subsidiaries of housing associations. Not only must trading be on an arm’s length basis, all loan funding must similarly be provided not only on an arms’ length basis but also the housing association must not act as lender of last resort to its subsidiary. We have managed this issue by careful financial analysis and modelling as the basis for providing a client with a reliable opinion on the value of investment needed.

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