In many buyouts by PE firms, the description of the rationale of the deals mention that the PE firm can support both financially for new investments as well as operationally. But how exactly is capital injected by the PE firm for new investments? The sponsor equity injection + LBO debt is used to purchase shares from existing shareholders, not new investments. Is it in the form of more debt (shareholder loans, senior debt etc) or through new equity raises (the company is private after buyout) where the PE firm essentially dilutes itself?
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