- Client: Limited Partner (LP)
- Loan Amount: £4,000,000
- LTV: 50%
- Share Type: Charge over LP’s carried interest in VC Funds
- Interest Rate: 2.5% over BoE base rate
- Term: 4 years
Enness was approached by a Limited Partner (LP) and high-net-worth individual who had invested significant capital into the funds of a European venture capital firm focused on technology and internet start-ups. The client was looking to unlock liquidity against their carried interest without having to sell or otherwise dispose of their underlying investment interests.
The requirement presented a specialist lending challenge. Traditional securities-backed lending is typically structured against readily valued and tradable assets such as listed equities, bonds or investment funds. In this case, the proposed security was the client’s carried interest in venture capital funds, requiring a lender comfortable assessing a less conventional form of collateral.
Rather than relying on a standard lending structure, Enness explored specialist lenders with the appetite and experience to consider the underlying asset and the client’s position within the venture capital funds. The objective was to structure a facility that provided meaningful liquidity while reflecting the nature and expected value of the carried interest.
Following discussions with specialist lenders, Enness secured a £4,000,000 facility at 50% LTV, with a four-year term and an interest rate of 2.5% over Bank of England base rate. The facility was secured through a charge over the client’s carried interest in the relevant VC funds.
The structure allowed the client to access capital without needing to sell their carried interest. This provided greater flexibility while allowing the client to retain their underlying exposure to the venture capital investments, subject to the terms of the facility and the performance of the underlying funds.
Specialist lending against alternative forms of wealth can require a more detailed assessment than conventional securities-backed lending. Lenders may consider the nature of the underlying investments, the structure of the funds, the borrower’s position, the anticipated liquidity of the security and the proposed repayment strategy.
This case demonstrates how bespoke Lombard lending and securities-backed finance can be structured around less conventional assets where the appropriate specialist lender can be identified. Enness can work with lenders to assess complex collateral and negotiate facilities designed around the borrower’s requirements.
If you are looking to raise liquidity against investments or other assets, Enness can assess your circumstances and explore specialist finance options. To discuss your requirements, speak to a mortgage specialist.
Risk Warning:
Securities-backed and Lombard lending carries risks. The value of investments and other assets used as security can fall, potentially resulting in additional collateral requirements or enforcement action. If you do not meet the terms of the facility, the lender may take action against the assets securing the loan.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Enness does not provide advice on securities-backed lending or investments, and lender introductions are unregulated. Finance is subject to status, underwriting, asset suitability and lender criteria. Terms and availability will vary depending on individual circumstances.
Information contained in our case studies is for market and illustrative purposes only. In some cases, these may be made up of multiple cases and are for illustrative purposes only.
Some case studies are made up of enquiries that have come into the business, not all business completes, and the posting of a case study does not represent a completed piece of business.
Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
