Term · Capital Measures & Financing
Capital increase
In briefIn a capital increase a company issues new shares against contribution and thus strengthens its equity, while the number of shares outstanding rises. For capital-hungry small caps it is the most common financing instrument and usually goes hand in hand with dilution.
Definition
Issue of new shares against contribution, increasing the number of shares outstanding and, as a rule, equity.
How it is calculated
Formula. Capital raised = number of new shares × issue price.
Why it matters for small caps
For capital-hungry small caps it is the most common financing instrument – directly relevant to criterion 3 of the stop-or-go check.
Common misreadings
- It is judged negatively across the board, although a well-justified capital increase tied to progress is not a knock-out criterion.
In the process
Frequently asked
What is a capital increase?
It is the issue of new shares in exchange for fresh capital, increasing the number of shares and, as a rule, equity. The volume raised follows from the number of shares and the issue price.
What is the purpose of a capital increase?
Companies use it to fund growth, projects or ongoing financing. For small caps it is decisive whether the money visibly flows into progress.
Is a capital increase a bad sign?
It is often seen negatively across the board, because existing shares are diluted. A well-justified capital increase tied to progress, however, is not a knock-out criterion.
Related terms
Sources
Primary
Bundesministerium der Justiz – Aktiengesetz (AktG)
https://www.gesetze-im-internet.de/aktg/
https://www.gesetze-im-internet.de/aktg/
Methodology
IFRS Foundation – IAS 33 Earnings per Share
https://www.ifrs.org/issued-standards/list-of-standards/ias-33-earnings-per-share/
https://www.ifrs.org/issued-standards/list-of-standards/ias-33-earnings-per-share/
Education only, not investment advice. Ranges and thresholds are didactic orientation values, not an official standard.