In a climate where strategic investments and balance-sheet flexibility are paramount, many companies are opting to sell minority stakes in select assets or business units. The financing strategy is straightforward: By carving out a portion of the business into a joint venture (JV) and selling a minority interest, a company receives an immediate equity infusion—funds that can be directed toward growth initiatives, debt repayment, or other corporate priorities. This approach allows a corporate sponsor to secure fresh capital without relinquishing full control of their core operations, preserving the ability to reinvest in areas that fuel long-term competitiveness. From the perspective of creditors, however, minority-stake JVs may involve significant transfers out of the corporate group, and in some cases, the JV assets may not be available to its creditors.
In addition to using JV structures to achieve flexibility through minority asset sales, KBRA has observed several instances where…