An index based on 40 of the largest and most liquid stocks traded on the Paris Stock Exchange.
See index.
Glossário
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CAC-40 (Compagnie des Agents de Change 40 Index)
An index based on 40 of the largest and most liquid stocks traded on the Paris Stock Exchange.
See index.
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Call option (or call)
The right to purchase a specified number of securities at a fixed price at or during a specified time.
Compare put option.
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Capital Asset Pricing Model (CAPM)
Capital Asset Pricing Model determines the cost of equity of a quoted company. This cost depends on the risk free interest rate, the return of a market index and the security’s volatility, compared to the overall market.
See Beta.
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Capital gains
If an asset is sold at a higher price than that at which it was bought, there is a capital gain
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Capital markets
A market place in which long-term capital is raised by industry and commerce, the government and local authorities. Stock exchanges are part of capital markets.
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Capital under management
This is the total amount of funds available to fund managers for future investments plus the amount of funds already invested (at cost) and not yet divested.
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Capital weighted average IRR
The average IRR weighted by fund size.
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Captive fund
A fund in which the main shareholder of the management company contributes most of the capital, ie where parent organisation allocates money to a captive fund from its own internal sources and reinvests realised capital gains into the fund.
Compare semi-captive fund, Independent fund.
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Carried interest
A bonus entitlement accruing to an investment fund’s management company or individual members of the fund management team. Carried interest (typically up to 20% of the profits of the fund) becomes payable once the investors have achieved repayment of their original investment in the fund plus a defined hurdle rate.
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Cash alternative
If the offer or offers shareholders of the target company thechoice between offer or securities and cash, the cashelement is known as the cash alternative.
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Cash flow
Net earnings after tax plus depreciation, plus non-cash items
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Cash Flows to Equity Valuation
A variant of the DCF model, where future cash flows to the equity owners of the company are discounted at the cost of the equity, thus directly calculating the equity value.
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Cheap stock
Stock (or rights to acquire stock) issued to employees, consultants, promoters, etc, of the issue company at a price lower than the public offering price, particularly if issued within one year prior to the public offering.
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Chinese walls
Deliberate information barriers within a large company to prevent conflict of interest between different departments.
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Class action suit
A lawsuit brought by one person on behalf of a larger group of individuals who all have the same grievance.
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Class of securities
Classes of securities are securities that share the same terms and benefits. Classes of capital stock are generally alphabetically designated (eg, Class C Common Stock, Class A Preferred Stock, etc)
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Classified stock
The separation of a company’s capital stock into multiple classes (eg Class A, Class B, etc).
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Clawback option
A clawback option requires the general partners in an investment fund to return capital to the limited partners to the extent that the general partner has received more than its agreed profit split. A general partner clawback option ensures that, if an investment fund exits from strong performers early in its life and weaker performers are left at the end, the limited partners get back their capital contributions, expenses and any preferred return promised in the partnership agreement.
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Cliff Vesting
A feature of some stock option plans and pension plans. Whenused in stock options, all stock options granted by the employer are vested(become the property of the employee) after a certain specified date, ratherthan accruing gradually. When used in pension plans, all matching contributionsprovided by the employer become the property of the employee after a certainspecified date, rather than accruing gradually.
See Stock option.
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Closed-end fund
Fund with a fixed number of shares. These are offered during an initial subscription period. Unlike open-end mutual funds, closed-end funds do not stand ready to issue and redeem shares on a continuous basis.
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Closing
A closing is reached when a certain amount of money has been committed to a private equity fund. Several intermediary closings can occur before the final closing of a fund is reached.
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Club deal
A deal where several buyout houses pool their resources together when buying a company of significant size, which would be otherwise inaccessible for them alone, either due to the purchase price or fund investment restrictions.
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Co-lead investor
Investor who has contributed a similar share with the lead investor in a private equity joint venture or syndicated deal.
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Collateral
Assets pledged to a lender until a loan is repaid. If the borrower does not pay back the money owed, the lender has the legal right to seize the collateral and sell it to pay off the loan.
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Comfort factor
An indication of the extent to which a investor can seek to reduce his risk by checking up on aspects of the business such as the state of relationships with its customers or whether its products are highly rated by reputable authorities. Comfort factors can often by provided by due diligence.
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Commercial paper
An unsecured obligation issued by a corporation or bank to finance its short-term credit needs (eg accounts receivable or inventory). Maturities typically range from 2 to 270 days.
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Commission Bancaire et Financière/Commissie voor het Bank en Financiewezen (CBF)
The Belgian Commission of Banking and Finance is the competent authority regulating the securities industry in Belgium.
See Competent Authority.
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Commission des Opérations de Bourse (COB)
The competent authority regulating the securities industry in France.
See Competent Authority.
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Commitment
A limited partner’s obligation to provide a certain amount of capital to a private equity fund when the general partner asks for capital.
See Drawdown.
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Common shares/stock
See Ordinary shares.
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Common stock equivalents
Debt and/or quasi-equity type securities capable of subscription, exchange or conversion into the company’s common stock (ordinary shares). In calculating dilution, earnings per share, etc, the number of ordinary shares is often adjusted to reflect conversion of common stock equivalents.
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Common stock ratio
A company’s common stock (ordinary shares) divided by its total capitalisation, expressed as a percentage.
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Company buy-back
A redemption of private or restricted holdings by the portfolio company itself.
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Competent Authority
A term used within Directives produced by the European Commission to describe a body identified by a member state of the European Union as being responsible for specified functions related to the securities market within that member state. Areas of competence include: the recognition of firms permitted to offer investment services; the approval of prospectuses for public offerings; the recognition and surveillance of stock markets. A member state may nominate different Competent Authorities for different areas of responsibility.
See Investment Services Directive, Prospectus Directive.
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Competing offer
Another contemporaneous offer for the target company by a third party.
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Completion
The moment when legal documents are signed. Normally, also the moment at which funds are advanced by investors.