A capital increase is a form of financing used by companies in order to generate funds. Typically, a capital increase occurs through the issuance of new shares. Once the new shares are issued and sold, the proceeds go to the company to be used for whatever purpose they were intended for (like expansion, for example).
There are many reasons as to why a company would perform a capital increase. Capital increases could be used to re-balance the capital mix. The proceeds from the capital increase could be used to pay off some debt. Another reason could be for growth. Using the funds to increase production capabilities for example.