Debt or Equity in the Financing or Co-operative Enterprises

A major issue for co-operatives is their ability to raise member or investor capital to fund growth. A financial instrument, termed Co-operative Capital Unit (CCU), has been introduced in Australia to increase the sector‟s flexibility in raising and retaining capital. CCUs are loosely defined in the legislation and can take the form of debt or equity. A Delphi Panel of experts was used to examine CCU structures in terms of their intended purpose and their likely attractiveness to investors. CCUs were more likely to be attractive as equity than debt investment instruments, with the potential to attract capital investment without diluting control. The challenge of achieving investor attractiveness is discussed and a new equity and control structure is proposed to address identified challenges.