- Client: French National and Resident
- Net Worth: £121m+
- Security: French-listed company shares with a market capitalisation of approximately €200m
- Loan: €8.2m
- Product: Three-year single stock loan, with a 24-month lock-in
- Interest Rate: 3.50% per annum
In this case, Enness was approached by a high-net-worth shareholder who held a highly concentrated position in a French-listed company and wanted to diversify their investment portfolio without having to sell their existing shareholding. The client was a French national and resident with a net worth of more than £121 million, with a significant proportion of their wealth held across technology investments and real estate.
The client had established relationships with private banks due to their significant wealth. However, their existing banking relationships were unable to provide the completely dry lending solution required. The client had initially considered selling part of their position to create liquidity, but was reluctant to give up the potential future upside of the investment.
Single stock lending provided an alternative route. By using the listed shares as security, the client could unlock capital while retaining exposure to the underlying investment. This allowed them to diversify into other opportunities without having to liquidate their existing position.
A key challenge was the size and nature of the listed company. With a market capitalisation of approximately €200 million, the stock was smaller than the type of securities many mainstream private banks are comfortable accepting as collateral. The client was initially unaware that financing could be arranged against a holding of this nature, making specialist lender access particularly important.
Enness approached lenders with the experience and appetite to consider concentrated positions in smaller and mid-cap listed companies. Following a detailed review of the client’s wealth, the shareholding and the proposed use of the funds, we successfully secured an €8.2 million single stock loan on a three-year term at 3.50% per annum, with a 24-month lock-in period.
The structure also allowed the client to retain their voting rights and dividends associated with the shares. This meant they could continue to benefit from the underlying investment while using the value of their shareholding to create additional liquidity for diversification and new investment opportunities.
The facility provided the client with an alternative to selling their concentrated position and allowed them to retain the potential future upside of the investment. If the client chose to sell the shares in order to repay the loan, the lender could liquidate the position and return any surplus proceeds to the client after repayment.
This case demonstrates how single stock loans can provide liquidity for shareholders who have significant wealth concentrated in a single listed company. Where traditional lenders may be unwilling to accept smaller or less widely traded stocks, specialist lenders can sometimes provide a more flexible solution based on the wider circumstances and quality of the underlying security.
Enness works with specialist lenders to arrange bespoke securities-backed lending solutions for entrepreneurs, shareholders and high-net-worth individuals. To discuss your requirements, speak to a mortgage specialist.
Risk Warning:
Securities-backed lending carries risks. The value of listed shares can fluctuate significantly, and a fall in the value of the collateral may result in a requirement to provide additional security or repay part of the loan. If you do not meet the terms of the facility, the lender may enforce its security over the shares. You could lose some or all of the value of the investments used as collateral.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Finance is subject to status, underwriting, collateral assessment and lender criteria. Terms and availability will vary depending on individual circumstances. Enness does not give advice on Securities-Backed Lending or investments, and lender introductions are unregulated.
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.
