Which financing structures are typically used in private capital transactions?

In private capital transactions, the financing structures predominantly used include debt financing, equity investments, and hybrid instruments.

Debt financing refers to funds borrowed that must be repaid over time, often with interest. This can involve loans or bonds where investors seek a return on their investment through interest payments. Equity investments involve the purchase of ownership stakes in a company, allowing investors to share in the profits and losses while potentially benefiting from capital appreciation. Hybrid instruments combine features of both debt and equity, such as convertible bonds, which can be converted into equity at a later date under certain conditions. This flexibility allows firms to customize their capital structure to meet specific operational needs or investor preferences.

The other options do not align with typical financing structures in private capital. Community funding models are generally more localized and not a standard method for private equity transactions. Microloans and municipal bonds typically serve different financing needs and markets, focusing on small businesses or community projects rather than private capital deals. Lastly, while insurance policies and retirement funds can be sources of capital, they are not direct financing structures utilized in private capital transactions.