- Client: Korean-listed company
- Market Capitalisation: $100 million+
- Financing Requirement: Circa $15 million
- Term: 5 years
Enness was approached by a Korean-listed company looking to raise approximately $15 million against its listed shares. The objective was to access additional liquidity to support further investment and growth opportunities without having to sell down the company's existing shareholding.
The shares were held through an offshore company, with the ultimate beneficial owner (UBO) being an employee of the listed company. The UBO was an experienced entrepreneur who also held board positions across several listed companies. A significant proportion of their wealth was concentrated in the Korean-listed stock, creating a need for additional liquidity without disrupting the underlying investment position.
Given the concentration of wealth in a single listed security, a conventional lending structure was not the most appropriate solution. Enness therefore explored a single-stock loan, allowing the shares to be used as collateral while providing the borrower with access to capital for its wider investment and growth objectives.
Enness secured a non-recourse financing structure with a five-year term. The shares formed part of the lender's collateral for the duration of the facility, while the borrower retained the economic interest and potential upside associated with the investment under the agreed structure.
Single-stock lending can provide an alternative source of liquidity for shareholders and businesses with significant wealth concentrated in one listed security. Rather than selling shares to generate capital, borrowers can potentially use the value of their existing holdings to access funding while maintaining their longer-term investment strategy.
Depending on the structure, securities-backed finance can provide liquidity for further investment opportunities without requiring the underlying securities to be sold. Facilities can also be structured around factors such as the required loan amount, term, repayment profile and currency, subject to the lender's assessment of the underlying security and the borrower's circumstances.
In this case, the five-year facility provided the company with additional liquidity to pursue its growth strategy while avoiding the need to dispose of its concentrated shareholding. The transaction demonstrates how specialist securities-backed lending can be used to unlock liquidity from listed investments while maintaining exposure to the underlying asset.
Enness works with specialist lenders across a range of listed securities and complex shareholder structures. If you are looking to raise capital against a concentrated shareholding without immediately selling your investment, speak to a finance specialist to discuss your requirements.
Risk Warning:
Securities-backed lending carries risks. The value of listed securities can fluctuate significantly, and a fall in the value of the collateral may result in additional security requirements or other lender action. If the terms of the facility are not maintained, the lender may be entitled to realise the pledged securities. Non-recourse structures and the treatment of dividends, voting rights and future appreciation will depend on the specific terms agreed with the lender.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Enness does not provide investment advice. Lender introductions and certain securities-backed lending arrangements may be unregulated. Finance is subject to status, underwriting, security assessment and lender criteria. Terms and availability will vary depending on individual circumstances and the proposed transaction.
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.
