- Client: UK national and resident
- Loan Amount: Circa £1.6 million
- Security: Restricted pre-IPO shares in a global technology company
Enness was approached by a UK national looking to release approximately £1.6 million against a holding of pre-IPO shares in a leading global technology company.
The shares were restricted and available through the secondary market at a significant discount to the company’s perceived market value. While this represented an opportunity for the client to unlock liquidity, it also made the financing more complex. Lenders can be cautious about lending against restricted shares where there is uncertainty around when, or whether, the underlying company will complete an IPO.
Rather than treating the shares in the same way as a conventional listed stock, Enness worked through the specific characteristics of the holding and the wider circumstances surrounding the company. This included carrying out due diligence on the stock and considering the potential IPO trajectory before approaching suitable lending partners.
Following this process, Enness successfully negotiated a bespoke facility for the client. The terms included an equity kicker, providing a structure that reflected the specialist nature of the shares and the lender’s requirements.
The facility was made available within a matter of weeks after the client decided to proceed, giving them access to liquidity without requiring them to sell their underlying shareholding.
The case highlights the more specialist nature of securities-backed lending when the underlying assets are not yet publicly traded. Restricted or pre-IPO shares can require a much more detailed assessment than conventional listed securities, with factors such as liquidity, transfer restrictions, valuation and the potential exit all influencing a lender’s appetite.
For shareholders holding pre-IPO or other restricted securities who are considering releasing liquidity from their holdings, speak to a Securities-Backed Lending Specialist to discuss the available options.
Disclaimer:
This case study is for illustrative purposes only and does not constitute investment, legal, tax or financial advice. Enness does not provide investment advice or recommendations. Securities-backed lending is subject to lender criteria, due diligence and the characteristics of the underlying assets. The value and liquidity of securities can fluctuate, and borrowers may be required to provide additional collateral or repay borrowing if the value of the underlying securities falls. Terms and availability will vary depending on individual circumstances and the assets being offered as security.
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