Case 3 | Issued & Outstanding Shares Model
All investors are entitled to a number of shares with respect to their investments. However, investment made by the investors may not cover the total project cost. In that case SDG may look for potential investors or bank loans can be used to complete the project.
The Project Total Cost also determines the number of Outstanding and Issued shares. New shares are issued for the New Investor, Bank Principal and Interests.
• Issued and Outstanding Shares Model: Investors’ shares are not determined by their contributions according to the investment needed. Instead they receive 1 Outstanding Share for each USD 1.000 they invest. The formula for Issued and Outstanding Shares Model which determines the investor’s percentage in the Fund at the end of the project: (Total Number of Shares held by the investor ÷ Total Shares Issued) x 100.
If 1.020 shares are issued at the end the Project:
• New investor would receive 45 shares and the bank 220.
• The new investor’s percentage in the Fund would be (45 ÷ 1.020) x 100 = 4,41%
• The new bank’s percentage in the Fund would be (220 ÷ 1.020) x 100 = 21,57% (Principal 19,61% + Interest 1,96%).