Why do we need to explain the use of funds, and how detailed does it need to be?
The planned use of funds must be presented in a specific, clear and transparent manner. Investors should be able to understand how the capital raised through the offering is intended to be used.
How detailed does the use of funds need to be?
The individual purposes should be clearly identified and should generally include a percentage allocation of the offering volume.
General descriptions such as “growth” or “working capital” are generally not sufficient on their own. Instead, the specific measures or areas of the business to be financed should be described in a transparent and understandable manner.
Why is the use of funds required at an early stage?
The breakdown of the use of funds is required for the regulatory and contractual preparation of the offering. In particular, it is incorporated into the following documents:
- the Key Investment Information Sheet (KIIS)
- the terms and conditions of the offering
Until the use of funds has been finalised, the KIIS and the terms and conditions of the offering cannot be completed. An incomplete or outstanding use-of-funds allocation is therefore one of the most common bottlenecks when preparing an offering.
Coordinate the planned use of funds with your Financing Manager as early as possible. This facilitates the preparation of the offering documentation and helps reduce subsequent revision rounds.