Mezzanine finance traditionally forms the middle layer between senior debt and equity in a financing package and is a well established type of specialised finance in the USA and Europe. Mezzanine capital is usually a loan instrument, carrying a relatively high interest rate and, additionally, is often linked to equity performance through warrants.  

• Mezzanine finance can take many forms but is usually seen as a subordinated form of junior debt
• Mezzanine finance is of a flexible nature allowing it to be applied in a number of financing arrangements/circumstances
• The demand for mezzanine finance derives from situations when equity investors need external funding for financing transactions or projects, in addition to that available from traditional senior loans, but where they also wish to limit the amount of equity they to committ to the project