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1.it is cheaper to raise this finance because it will be available in large sums and from a few companies i.e flotation costs will be low.
2.These institutions using their financial experience can advise the company in its investment activities so as to utilize such finance more profitably.
3.the cost of servicing their finance is low as these will be paid with a few cheques unlike the case with a company having a large number of shareholders with will issue many cheques this increasing the cost of servicing this finance.
4.These investors will come to the rescue of the company permanent finance if they purchase ordinary shares and this will be used in long term ventures.
5.Being major shareholders they will contribute valuable ideas during the annual general meetings and such ideas may improve the running of the company benefiting from such finance.
sharon kalunda answered the question on April 16, 2019 at 14:32
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