Securities-backed lending, the process of utilising stock, shares, bonds and many other financial assets as collateral for a loan, is becoming an increasingly popular way to raise finance as the demand for liquidity is growing.
We recently assisted a serial entrepreneur with extensive experience in launching companies with unique strategies in emerging markets. The client had co-founded two publicly traded companies in Canada and the United States with shares worth approximately C$14.2 million. Listed on the NEO Exchange, the first company operated in the decentralised finance (DeFi) space, based on secure distributed ledgers similar to those used by cryptocurrencies. The second company, listed on the Canadian Securities Exchange and with plans to be listed on NASDAQ, was focused on the development and commercialisation of electric vehicle technologies.
The client was looking to raise as close to €4 million as possible, which he wanted to place as AUM (assets under manager) with a private bank. The private bank, in turn, would provide the client with a mortgage for his residential property purchase. Where most lenders could only offer this type of finance against securities on very large stock exchanges, Enness will be able to source and negotiate deals against securities on smaller exchanges, as well as offering solutions for various types of shares.
In this case, we successfully sourced a lender that could cater to the client's requirements by offering a 63% LTV loan for a term of 24 months. Borrowing against your securities to raise capital can allow you to hold your investments long-term while they appreciate through economic cycles. To discuss your scenario, get in touch today.