High Value Pre-IPO Financing
26th November 2021
Key Facts:
- Client: UK based UBO
- Security value: $6,500,000
- Loan amount: $1,000,000
- The Share: pre-IPO shares, non-listed
- Interest Rate: 8% per annum (PIK), 5.25% Equity Option
Pre-IPO stock loans are offered on a truly case-by-case basis. Most lenders will likely prefer lending to shareholders whose businesses have publicly announced that they intend to list within the next 12 months or have already started the IPO process.
In this case, our client was an UK based employee of a pre-IPO consumer technology company located in the US. The company has gone through its Series F Funding with a post valuation of $5.25 billion. The client was looking to raise $1 million for taxation and personal liquidity basis.
Pre-IPO loans tend to be complex because there’s a lot more constraints and risk than, say, using a diverse portfolio of high-volume stocks listed on major exchanges as collateral for a loan. Generally, to benefit from this specialist type of financing, lenders will consider lending against stocks in very solid, high growth companies with in-demand products or services.
Despite the complexities of the case, we met the client's requirements by securing a non-resource loan. Since the lender only required a pledge of the shares, the UBO could retain equitable rights of the shares throughout the loan.
Contact Enness to learn more to have an informal and no-obligation chat about pre-IPO loans and if it could be a good solution for you.
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