Related Blog Posts
See Our Blog
2021 has been our best year in business. We received 2,468 qualified leads this year, which amounted to just over £9 billion in financing requirements.
While that’s a great thing for us as a business, it also reflects a substantial shift in attitudes towards finance and debt. In essence, these figures highlight borrowers’ increasing aptitude for (and understanding of) finance – something we celebrate wholeheartedly.
So, what’s fuelling the demand for high-value debt at these kinds of levels?
For one, gone are the days when cash ruled the roost. It makes little sense for high-net-worth individuals (HNWI) to have lots of money sitting in bank accounts in today's world, given interest rates are nominal (sometimes negative). Given the opportunities to make solid returns in property, luxury assets, the stock market, digital assets and through businesses, it’s no wonder HNWI are advised to deploy capital into various investments rather than leave it sitting in the bank.
It’s a solid strategy, and many HNWI are reaping the benefits in ROI. But this means that wealth is effectively locked up in long-term investments or assets, creating other challenges. HNWI often have little liquidity with no immediate access to cash when they need it, despite a significant net worth overall. Selling assets to generate the required capital will often have an immense opportunity cost when pitted against future appreciation. The fiscal implications of selling assets to generate liquidity also mean this isn’t always an ideal route.
Long story short? HNWI borrowers and their advisors have looked at other options, and debt has presented itself as an ideal alternative. Where HNWI would once have liquidated assets to generate capital, many will now consider finance. Provided their assets support what they want to borrow and the deal is well-advised and well-structured, finance has become something of an all-star problem-solver and opportunity creator for HNWI.
Every year, our client base becomes broader – something that’s not always easy when you work at the top of the market, serving a relatively niche clientele. This year, we brokered finance for everyone from music industry entrepreneurs to well-known figures in the business community, sports stars, private bankers, and well-known HNWI. The clients we served this year had an average net worth of more than £12 million.
In some ways, this is business as usual for us. However, the increasing net worth of our clients again underlines that there’s less trepidation about using finance and the opportunities debt presents vs reliance on cash.
Our expertise and support are still invaluable – perhaps more than ever before. Increasingly, the ‘cheapest’ finance package often isn’t always a top priority for our clients, for example. However, getting the ‘best’ deal is imperative (whatever that means for the borrower at the centre of the deal): flexible terms sometimes trump cost, the ability to borrow a little bit more is sometimes more useful than a less expensive loan and so on.
In many ways, negotiating finance is only one part of what we do. Just as much of our time goes into helping clients understand their options for finance, making sure they are comfortable with how finance works and ensuring their plans are feasible.
This year our Head of Securities-backed lending, Zara Akbar, brokered Enness’ largest-ever loan of $150 million. The transaction was highly complex given the very significant finance requirement and the fact that the deal involved a single line of stock. International private banks could not offer finance, but we secured competitive terms from a non-bank lender.
There has been unbelievable demand for portfolio finance this year, signifying both the opportunities for this type of loan and the variety of lending products available. Single stock loans, loans against stocks listed on smaller stock exchanges and pre-IPO loans are all possibilities in ways they weren’t before. Borrowers are more aware of the products available to them, although while a broker often remains crucial for accessing portfolio finance and negotiating the best deal. Our clients are jumping at the opportunity to borrow without liquidating these lucrative securities to generate capital.
Today most of the finance we broker has a cross-border element. Sometimes this is a deal where the HNWI will deploy finance in a different country than where the lender is based or where they reside. In other cases, this is represented by a ‘domestic’ transaction where the borrower and lender are physically in the same country, but the borrower is a foreign national or has global assets they want to use as collateral.
Even though many HNWI are globally mobile to some degree and most have international assets, cross-border borrowing remains unduly complex. The sheer number of nationalities we have served this year reflects this, as we are often the first port of call when borrowers realise how limited their financing options are. We’re delighted to be able to help, but overall, we would like it to be easier for HNWI to access international or cross-border debt without it necessarily being seen as a ‘complex’ scenario.
Naturally, we hope to beat this year’s figures in 2022. That’s partially our own ambition, but it also signifies the growing demand for finance and the more significant debt clients can take on. An increase in our figures usually represents more opportunities, possibilities and prospects for our clients. In other words, a stellar year for Enness is generally a stellar year for our clients, and we can’t think of anything we’d like to see more.