- Client: UK national and UK resident private equity executive
- Challenge: Required lending against unrealised carried interest with no traditional collateral support
- Loan Amount: £5M facility at circa 50% LTV
A UK-based private equity executive approached Enness seeking to raise capital against anticipated carried interest linked to a late-stage fund exit. The client held a significant participation interest within a mature private equity structure expected to generate substantial proceeds following the exit of underlying investments. The objective was to unlock liquidity ahead of distribution in order to participate in the next investment fund being launched by the firm.
The transaction presented several specialist structuring challenges. Most lenders are reluctant to recognise carried interest as acceptable collateral due to the subjective nature of future fund distributions and the dependency on underlying investment performance and exit timing. Unlike traditional listed securities or cash-generative assets, carried interest remains contingent until realised, making valuation and enforceability significantly more complex. In addition, underwriting required detailed access to confidential fund information and performance data in order for a lender to become comfortable with the projected distributions and overall credit profile.
Enness introduced a specialist lender experienced in structured finance solutions against private equity-related assets and deferred compensation structures. Following detailed review of the underlying fund performance, anticipated exit events, and projected carried interest distributions, a £5M debt facility was structured at approximately 50% loan-to-value. The financing was completed within a month, enabling the client to meet the required timeline for participation in the next investment fund launch while preserving longer-term exposure to the existing carried interest position.
This case demonstrates how specialist structured lending can provide liquidity solutions against complex private equity compensation arrangements where conventional lenders may not participate. By aligning lender underwriting with fund performance and anticipated exit proceeds, Enness enabled the client to access capital efficiently without disrupting broader investment positioning.
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