onomi on epts and erminolo ies 22.33
$15 trillion. In India, the market capitalisation of
miD-cAp funDs listed companies is around $600 billion.
Mutual funds launch sector-specific funds to The theory is that large-cap shares have lesser
attract investments. Similarly, they mobilise growth potential since the turnover and profits of
resources from investors with an objective of large companies are already high in the context of
investing in mid-cap shares. The Fund Manager that particular market. On the other hand, mid-
chooses the mid-cap shares that can become a cap shares are considered an attractive avenue
part of the portfolio. His job is to outperform the for investing because their growth rate should be
benchmark like the CNX Midcap 200 indexes in faster. It is analogous to investing in an emerging
terms of the returns. There are thousands of funds market, like India, as compared to a mature
world over that focus on investing in medium or market. However, on the flip side, mid-cap shares
small-cap companies. are of small companies where revenue and profits
could be more volatile than large companies.
mfbs At the same time, the availability of shares for
trading in the secondary market is also limited in
In August 2007, the Reserve Bank of India comparison to large-cap shares.
released a Manual on Financial and Banking
The National Stock Exchange manages an
Statistics (MFBS), first of its kind, which works as index called CNX Midcap 200. The objective of
a reference guide and provides a methodological such an index is to capture the movement in the
framework for compilation of statistical indicators mid-cap shares segment.
encompassing various sectors of the economy.
A financial world business of providing various
There is no classical definition of mid-cap shares. financial services other than lending such as public
The name ‘mid-cap’ originates from the term, issue management, underwriting such issues, loan
medium capitalised. It is based on the market syndication management, mergers and acquisition
capitalisation of the stock. Market capitalisation related services, etc.
is calculated by multiplying the current stock
price with the number of shares outstanding or mezzAnine finAncing
issued by the company. The definition of mid-cap
shares can vary across markets and countries. In Mezzanine financing is defined as a financial
case of India, the National Stock Exchange defines instrument which is a mix of ‘debt and equity’
the mid-cap universe as stocks whose average finance. It is a debt capital that gives the lender
six months market capitalisation is between Rs. the rights to convert to an ownership or equity
75 crore and Rs. 750 crore. In the US, mid- interest in the company. It is listed as an asset
cap shares are those stocks that have a market on company’s balance sheet. As it is treated as
capitalisation of Rs. 9,000 crore to Rs. 45,000 equity in a company’s balance sheet, it allows the
crore. In India, these shares will be classified as company to access other traditional sources of
large cap shares. Thus, classification of shares into finance.
large-caps, mid-cap and small-cap is made on the In the hierarchy of creditors, mezzanine finance
basis of the relative size of market in a country. is subordinate to senior debt but ranks higher
The total market capitalisation of US markets is than equity. The return on mezzanine finance is