- Security value: £32,624,000
- Loan amount: £8,156,000
- LTV: 25%
- Security: US-listed stock
- Rate: 5.175% fixed
- Term: 10 years
Enness was approached by the co-founder and president of a Silicon Valley technology company who was looking to create liquidity against a substantial holding of the company’s shares. The stock was listed on the New York Stock Exchange, having begun trading publicly in 2021, and the company had a market capitalisation of approximately $3 billion.
The client wanted to unlock part of the value held in the shares without selling the position. The aim was to create additional liquidity that could be used to diversify investments and revenue streams while maintaining exposure to the underlying company.
Single stock lending can be more complex than traditional Lombard lending, where a lender typically takes a diversified portfolio of securities as collateral. A concentrated holding in one company can carry greater volatility and therefore requires a lender with the appetite and expertise to assess the specific stock and the wider circumstances of the borrower.
In this case, the value of the securities provided substantial collateral, with a security value of £32.624 million against a £8.156 million facility. This represented a conservative 25% LTV and helped support the structure required by the client.
Enness identified a specialist lender able to consider the US-listed stock as collateral and negotiated a £8.156 million facility at a fixed rate of 5.175% over a 10-year term. The structure provided the client with access to liquidity without requiring an immediate disposal of the shareholding.
The case demonstrates how single stock loans can provide an alternative source of liquidity for entrepreneurs and shareholders with significant concentrated positions. The suitability of this type of finance will depend on the underlying security, its liquidity and volatility, the proposed LTV and the lender’s appetite.
Enness works with specialist lenders across the securities-backed lending market and can help assess whether a single stock loan could be appropriate for your circumstances.
Risk Warning:
Securities-backed lending carries significant risks. The value of listed securities can fluctuate, and a fall in the value of the collateral may result in a requirement to provide additional collateral or repay part of the facility. If the required obligations are not met, the lender may be entitled to sell the pledged securities. Borrowers could therefore lose some or all of the value of their investment.
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 in relation to securities-backed lending. Lender introductions in this area are unregulated. Finance is subject to lender criteria, collateral suitability and individual circumstances.
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.
