£15 Million, Illiquid Asset Facility For An Ultra High-Net-Worth UK Individual
26th September 2023
Key Details
- UK Resident/National
- Net worth: Circa £25+ million
- GP in PE firm with + $2.6 Billion in committed capital under management.
- Diversified portfolio
- Financing requirements: £15 million
- Terms offered: 4-year term at 18% annual PIK interest rate
In this case, we assisted an ultra-high-net-worth individual looking to raise capital of £15 million through what was effectively a structured illiquid asset lending.
The client spent over 25 years investing in Europe and globally, most recently as Global Head of Private Equity for a FTSE-100, where they were responsible for managing £12bn of assets across Europe and North America. The client had built a net wealth of over £25 Million, comprising a diversified portfolio of both General Partners (GPs or managers of the fund) and Limited Partners (LPs or investors in private equity) interest in the Private Equity (PE) Funds, real estate, and private equity positions in various companies.
The client wanted to use their net wealth and a personal guarantee as combined collateral for a loan to allow them to access liquidity for additional investment opportunities, primarily real estate development opportunities and other private equity opportunities.
Illiquid asset lending is financing backed by illiquid and non-traditional assets that typically do not qualify for traditional bank financing, including ownership interests in private companies, fund vehicles and other esoteric assets. Such credit solutions are bespoke and arranged on a case-by-case basis.
The case included several customary financial covenants, such as specific covenants on particular LP interests and the real estate as mutually agreed between the client and the lender, providing a minimum NAV quantum. This loan facility also included a cash sweeping mechanism at the portfolio level whereby the lenders swept a certain percentage of cash flow from the LP interest realisations, crystalised carry, and realised rent, with the balance shared with the client. The facility allowed the client to retain c. 20% of the facility for personal use with no defined use of proceeds. Thus providing flexibility to the overall liquidity solution.
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