While single stock portfolios are often cited as being 'high risk', it's not an unusual position, especially for entrepreneurs who often retain a large portion of the company's shares. In this case, we were approached by the president and co-founder of a Silicon Valley based technology company. Listed on New York Stock Exchange, the company had started trading publicly in 2021 with a market cap of about $3 billion.
Our client was looking to create liquidity by raising equity against his single stock portfolio to diversify investments and revenue streams. Borrowers can also use single stock loans to buy assets, seek new investment opportunities, purchase a property or yield higher returns than the original shareholding.
In essence, single stock loans are just like a standard lombard loan where securities are used as collateral by a lender. The lender takes custody of the shares for the loan term and offers the borrower a credit line in return. However, single stock loans are typically more complex to arrange than 'standard' securities-backed lending, where the borrower's portfolio is generally more diverse. Many lenders will view single stocks as riskier collateral, which is why mainstream lenders don't always offer this type of borrowing, especially for borrowers seeking significant capital.
Enness has access to all lenders in this part of the market and will know which lenders to approach, whatever your situation and financing requirements. Showcasing your situation fully, accurately and providing lots of detail and context can help a lender offer competitive rates and terms. Enness acts as a partner at every stage of the transaction, handling all the fundamental elements of the deal on your behalf, troubleshooting and handling whatever we can to ensure the process requires as little of your time as is possible.
If you are looking for a single stock loan, get in touch today.