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Bubs Australia Ltd is considering raising an additional $35 million by selling shares to its current...

Bubs Australia Ltd is considering raising an additional $35 million by selling shares to its current shareholders to further expand its overseas markets. Is this a direct or an indirect financing? Briefly explain why.  

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The above case is of direct financing as funds are raised directly from the shareholders in a financial market. In the above case, Bubs Australia Ltd has raised additional capital by selling shares to its current shareholders. In this case, banks are not involved which forms a part of indirect financing, as funds are raised from shareholders which are part of the direct financing. Direct financing carries no interest to be paid as in the case of indirect financing. Direct financing are made from the financial market and in this case shareholders form a part of finacial market. Here, funds are raised directly from shareholders in the financial market for business expansion.

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