Capital Injection

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DEFINITION of 'Capital Injection'

An investment of capital generally in the form of cash or equity - and rarely, assets - into a company or institution. The word "injection" connotes that the company or institution into which capital is being invested may be floundering or in some distress, although it is not uncommon for the term to also refer to investments made in a start-up or new company.

BREAKING DOWN 'Capital Injection'

Capital injections in the private sector are usually made in exchange for an equity stake in the company into which capital is being injected. However, governments may make capital injections into struggling sectors to assist in their stabilization in the larger public interest; in such cases, a government may or may not negotiate an equity stake in recipient companies or institutions.

Following the unprecedented financial crisis of 2008, the U.S. government - as well as a number of other governments around the world - injected hundreds of billions of dollars into their financial sectors in an attempt to halt the conflagration that was threatening to engulf the global economy.

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