In this case, we assisted an ultra-high-net-worth individual from a Nordic country to raise capital of €10 million through what was effectively a pre-IPO loan.
The client was a Monaco resident and had a very considerable net worth, amounting to several hundred million euros. Most of this was tied up in shares in a company that was undergoing a deSPAC transaction. This meant that the individual was the UBO of a privately held holding company and was effectively going to list through a strategic merger with a SPAC (which was already listed).
The client wanted to use their shares as collateral for a loan to allow them to access liquidity before the completion of the deSPAC transaction. While they had a very significant net worth, most of this was linked to the individual’s shareholding rather than liquid and a loan was going to provide a short-term capital injection until the deSPAC was finalised.
Pre-IPO loans need to be arranged on a case-by-case basis, particularly because there can be more restrictive covenants than with other types of shareholding, and they can be riskier for a lender to use as collateral for several reasons (post-listing valuation, when the company will be listed, and longer-term considerations, including how the company will be managed after it’s listed, future acquisitions and so on).
The case was complex as the transaction involved a deSPAC, which made arranging this deal different than a more ‘vanilla’ pre-IPO loan as certain regulatory restrictions come into play just before a deSPAC process completes. However, we were able to secure a competitive, 12-month term at 2% per month.