Equity carve-out

Equity carve-out (ECO or a partial spin-off) is a sort of corporate reorganization, in which a company creates a new subsidiary and IPOs it later, while retaining control.^{[1] [2]} Usually, up to 20% of subsidiary shares is offered to the public. The transaction creates two separate legal entities—parent company and daughter company—with their own boards, management teams, financials, and CEOs. Equity carve-outs increase the access to capital markets, enabling carved-out subsidiary strong growth opportunities, while avoiding the negative signaling associated with a seasoned offering (SEO) of the parent equity.

See also

• Tracking stock

References

External links

• EQUITY CARVE-OUT (ECO)AS A FINANCIAL INSTRUMENT FOR CORPORATE RESTRUCTURING
• The Pricing of Equity Carve-Outs
• Equity carve-outs in favour across power companies