Subordinated, not equity
Mezzanine ranks below senior bank debt but above equity. It’s still debt — you keep ownership — but the lender takes junior risk, so it’s priced higher and often carries warrants or a redemption premium.
When a vanilla term loan can’t fund the deal.
Corporate Structured Finance — Mezzanine, Acquisition & Holdco Debt, Engineered Around Your Deal
Some situations don’t fit a standard term loan — an acquisition, a partner buyout, a holdco need, a cash-flow-backed event. Structured finance layers senior debt, mezzanine and AIF credit and bends the tenor, security and repayment to the deal. We don’t mass-apply; we close mandates — the right rail (PSU bank, private bank, NBFC or SEBI AIF), on the right terms, walked through to disbursement. Part of Finnova’s ₹4,250 Cr+ mobilised across 100+ corporate-finance mandates since 2011.
RBI 2026 acquisition-finance amendment SEBI Cat-II AIF rail Lender-agnostic
Finnova’s corporate-finance track record since 2011, in numbers
₹4,250 Cr+
Capital mobilised across sectors5
Structured rails we arrange4
Lender types — PSU, Pvt, NBFC, AIF₹550 Cr
Largest single facility mobilisedSince 2011
CA / ex-banker, senior on every fileStructured finance is bespoke debt designed around a specific situation rather than a vanilla term loan — it covers mezzanine finance, acquisition finance, holding-company (holdco) financing and event-linked / cash-flow-backed credit. It blends instruments and bends tenor, security and repayment to the deal. Mezzanine is subordinated, quasi-equity debt that ranks below senior bank debt but above equity — a higher coupon/IRR, but not equity, so you keep ownership. In India it’s delivered by banks within RBI rules and by NBFCs and SEBI Category-II AIFs where structure matters more than the lowest rate. See the full corporate finance & debt syndication practice.
Building or buying real estate? Real-estate structured and mezzanine deals (developer-side, LRD-backed, project finance) live on our dedicated real-estate structured finance page. This page is the broad corporate version — operating businesses, acquisitions and holdcos.
Finnova Advisory is an advisory firm — we structure the file, model the layers and negotiate the term sheet; the bank, NBFC or AIF sanctions and disburses. Rate bands and IRRs cited are indicative (Jun 2026), not a promise; pricing and eligibility are set by the lender, case by case.
Every structure, mapped
The structured-finance toolkit — and the rail each runs on
Five core structures, each sourced from a different lender type. The rail is chosen by what the deal qualifies for, not by what one balance sheet wants to fill.
| Structure | Primary rail | What it does | Typical tenor |
|---|---|---|---|
| StructureMezzanine / quasi-equity debt | RailAIF / NBFC | DoesSubordinated debt that bridges senior debt and promoter equity — higher coupon/IRR, often with warrants or a redemption premium. Junior risk, no ownership transfer. | Tenor3–6 yrs, bullet/PIK common |
| StructureAcquisition finance (large) | RailBank (2026) | DoesFunds up to 75% of acquisition value for eligible large acquirers under RBI’s 2026 amendment — ≥25% own funds, post-deal D/E ≤3:1, net worth ≥₹500 Cr. | TenorDeal-linked, structured amort |
| StructureAcquisition / buyout (mid-market) | RailNBFC / AIF | DoesSub-threshold partner buyouts and smaller acquisitions that don’t meet the 2026 bank route — structured credit, LAP, LRD and promoter funding. | Tenor3–5 yrs |
| StructureHoldco / promoter financing | RailNBFC / AIF | DoesDebt at the holding-company level — against shares, downstream cash flows or group assets — for consolidation, restructuring or promoter liquidity. | TenorCase-specific |
| StructureEvent-linked / cash-flow-backed credit | RailBank / NBFC / AIF | DoesFacilities sized and repaid against a defined event or future cash flow — milestone, monetisation or contractual receivable — rather than a fixed EMI. | TenorMapped to the cash flow |
Indicative pricing context (Jun 2026, not a quote): senior bank debt typically prices off MCLR (corporates are largely on MCLR, not repo-linked EBLR); NBFC structured credit runs higher; SEBI Category-II AIF private-credit funds target ~13–18% IRR — and that IRR is the return to the fund’s investors, not a posted borrower loan rate. Mezzanine sits between senior debt and equity in both rank and cost.
The instrument that bridges the gap
Mezzanine finance — debt that behaves a little like equity, but isn’t
Mezzanine fills the space between the senior debt a bank will give and the equity a promoter can put in. You pay more for it — but you don’t give up ownership.
Higher coupon / IRR
You compensate the junior lender with a higher coupon or target IRR than senior debt. Through a SEBI Cat-II AIF, target returns run ~13–18% IRR — the return to the fund’s investors, not a flat borrower rate.
Flexible repayment
Often bullet or PIK (payment-in-kind) rather than EMI — cash is conserved during the deal’s build phase and repaid on exit, refinance or a milestone, instead of from day-one amortisation.
Where it’s sourced
Primarily SEBI Category-II AIFs (private-credit funds, ~₹1 Cr min commitment, 3–5 yr horizons) and NBFC structured credit. These fund the gap banks won’t — between senior debt and promoter equity.
The cardinal 2026 change
Acquisition finance — banks can now fund buyouts, within limits
For decades, RBI prohibited banks from financing share acquisitions and buyouts. That has been superseded. From 2026, under RBI’s Commercial Banks – Credit Facilities Amendment Directions, 2026, banks may finance acquisitions for eligible large acquirers — but the thresholds are real, and not every deal qualifies.
The 2026 bank route — eligibility
The Revised Directions take effect 1 July 2026 (superseding the February 2026 version). The old blanket prohibition is no longer current law — but the headline never applies to a sub-threshold deal.
Below the threshold? You still have rails
- The 2026 bank route is built for large, well-capitalised acquirers — not every buyout is now bankable.
- Sub-threshold mid-market buyouts route via NBFC and AIF structured credit, LAP and LRD.
- Promoter funding and quasi-equity mezzanine fill the gap between senior debt and equity.
- We assess which rail your deal actually qualifies for — see partner buyout financing.
Compare lender types in PSU bank vs NBFC vs AIF debt.
The rest of the toolkit
Holdco financing & event-linked credit
Beyond mezzanine and acquisitions, structured finance solves two more situations a vanilla facility can’t.
Holding-company financing
Debt raised at the holdco level — against shares, downstream cash flows or group assets — for consolidation, restructuring or promoter liquidity. Typically an NBFC or AIF structure, sized to the group’s cash generation rather than a single operating entity’s balance sheet.
Event-linked / cash-flow-backed credit
A facility sized and repaid against a defined event or future cash flow — a milestone, a monetisation, a contractual receivable — instead of a fixed EMI. The repayment maps to the cash, which is exactly why a standardised term loan doesn’t fit.
How we run a structured mandate
From a situation a term loan can’t fund to a disbursed facility
The structuring is the work. We model the layers, fix the security and repayment, run a competitive process across rails, and walk it through to disbursement.
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Frame the deal & test eligibility
week 1We define the situation — acquisition, buyout, holdco, event — and test it against the 2026 bank route and the NBFC/AIF alternatives, so you know which rail your deal genuinely qualifies for before anyone is approached.
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Model the structure & the layers
weeks 1–2Senior, mezzanine, equity; security against shares, receivables or a holdco; bullet, PIK or amortising repayment. We build the layers and the term-sheet logic the lenders will underwrite against.
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Run a competitive process
weeks 2–6We take the file to PSU banks, private banks, NBFCs and SEBI AIFs in parallel — lender-agnostic — and negotiate pricing, covenants and security on competing term sheets, not a single take-it-or-leave-it offer.
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Close, document & disburse
to disbursementWe drive sanction, documentation, conditions precedent and the security creation through to disbursement — the part where structured deals usually stall. We don’t hand you a sanction letter and walk away.
Why Finnova for structured finance
We don’t mass-apply — we close mandates
Structured deals are won on the quality of the structure and the strength of the process. We sit on your side of the table across every rail, and we’re paid to get you to disbursement.
01
Genuinely lender-agnostic
PSU bank, private bank, NBFC or SEBI AIF — the rail is chosen by what your deal qualifies for, not by one balance sheet we’re trying to fill.
02
Ex-banker + CA depth
We model the layers and write the credit story the way the lender’s committee reads it — senior on every file, not a junior with a template.
03
2026-current on the rules
We work the new RBI acquisition-finance route and the AIF rail as they actually stand in 2026 — not the prohibition that no longer applies.
04
Walked through to disbursement
Conditions precedent, security creation, documentation — we drive the close, the stage where structured deals most often stall.
Consultation
Got a deal a term loan can’t fund?
Tell us the situation — an acquisition, a buyout, a holdco need, an event — and we’ll tell you which rail it qualifies for, how the structure should be layered, and what it’s likely to cost. No product pitch — a straight read from people who close these every week.
Thank you — your enquiry has been submitted
We’ve received your details. A senior member of our team will review them and get back to you within one business day. Everything you’ve shared stays strictly confidential.
FAQ
Structured finance, answered
Structured finance is bespoke debt designed around a specific situation — an acquisition, a buyout, a holding-company need, or a cash-flow-backed event — rather than a vanilla term loan or working-capital limit. It blends instruments (senior debt, mezzanine, NCDs, AIF credit) and bends the tenor, security and repayment to the deal. In India it’s delivered by banks within RBI rules, and by NBFCs and SEBI Category-II AIFs where structure matters more than the lowest rate.
Mezzanine is subordinated, quasi-equity debt — it ranks below senior bank debt but above equity. It is NOT equity: you do not give up ownership, but you pay a higher coupon or IRR to compensate the lender for taking junior risk, often with warrants or a redemption premium. In India it is typically delivered through SEBI Category-II AIFs (private-credit funds) or NBFC structured credit, used to bridge the gap between senior debt and promoter equity.
Yes, for eligible large acquirers — this is the cardinal 2026 change. Under RBI’s Commercial Banks – Credit Facilities Amendment Directions, 2026 (effective 1 July 2026), banks may finance up to 75% of acquisition value where the acquirer brings ≥25% own funds, post-acquisition debt-equity is ≤3:1, and net worth is ≥₹500 Cr (unlisted acquirers also need a BBB- or better rating), within capital-market-exposure caps. The decades-old blanket prohibition has been superseded.
Not every buyout is now bankable. The 2026 RBI route is built for large, well-capitalised acquirers. Sub-threshold mid-market partner buyouts and smaller acquisitions still route through NBFC and AIF structured credit, loan-against-property (LAP), lease-rental-discounting (LRD) and promoter funding. We assess which rail your deal actually qualifies for rather than assuming the headline applies to you.
A SEBI Category-II Alternative Investment Fund is the main private-credit and mezzanine rail in India — funds that lend structured, subordinated or event-linked debt with a typical ₹1 Cr minimum investor commitment, 3–5 year horizons and target returns around 12–18% IRR. Note that IRR is the return to the fund’s investors, not a posted borrower loan rate. AIFs fund deals banks won’t — the gap between senior debt and equity.
A term loan is standardised: a fixed amount, a fixed tenor, EMI repayment, senior security. Structured finance is engineered around the deal — layered seniority (senior plus mezzanine), bullet or cash-flow-linked repayment, security tied to shares, receivables or a holdco, and pricing that reflects the risk taken. You use it when a vanilla facility can’t fund the situation; you pay for the flexibility in coupon or IRR.
No. Finnova is an advisory firm — we structure the file, model the layers, and negotiate the term sheet across PSU banks, private banks, NBFCs and SEBI AIFs; the lender or fund sanctions and disburses. Our edge is mandate-led execution walked through to disbursement, and being genuinely lender-agnostic, so the structure is built around your deal, not around one balance sheet we’re trying to fill.