A form of financing that has the characteristics of both debt and equity, and hence appears as a distinct element on an entity’s balance sheet, ranked lower than debt and higher than equity in terms of liquidity priority. Features related to equity may include residual interest in the underlying assets or business, while those related to debt may be a maturity date or a put option of redemption, etc.

The characteristics include flexible repayment terms or standing of a subordinated debt. Quasi equity bears a higher risk than senior debt and a lower risk than common equity, while its returns are substantially based on the profits or losses of the underlying hybrid debt-equity combination, which is unsecured in the event of default. Quasi equity can be structured as preferred equity or debt, unsecured and subordinated, including mezzanine debt, and in specific cases it may be convertible into equity.

Quasi-equity instruments include perpetual bonds, subordinated loans, convertible debt, participating loans, and other instruments with similar features such as SAFE notes.

It is also known as quasi capital or redeemable capital.