Share-Backed Loan Secured Against a Concentrated Equity Position

Key Details:

• Client: UK-based individual
• Asset: Significant holding in a single publicly listed US equity
• Facility: Share-backed revolving credit facility
• Loan-to-Value: Approximately 50%, subject to lender criteria

The client was a UK-based individual with a significant proportion of wealth held in a single publicly listed US equity. The client sought to access liquidity while retaining ownership of the underlying shares and maintaining their existing investment position.

The requirement was for a share-backed revolving credit facility at approximately 50% loan-to-value, subject to lender approval, asset suitability and prevailing market conditions. The revolving structure was intended to provide flexibility, allowing capital to be accessed as required rather than requiring the client to draw the full facility immediately.

The concentrated nature of the holding presented the principal challenge. Many lenders prefer diversified investment portfolios when considering securities-backed lending, as concentration in a single equity can increase exposure to movements in the value of the underlying security. The transaction therefore required a specialist lender with appropriate appetite and risk controls for concentrated equity exposure.

Enness identified a specialist lender willing to consider a revolving facility secured against the single listed equity. The proposed structure incorporated appropriate lending parameters and was subject to the lender’s assessment of the underlying security, concentration risk, market conditions and the client’s circumstances.

The structure provided a potential route to accessing liquidity while allowing the client to retain ownership of the underlying shares. The revolving nature of the facility also provided flexibility around future capital requirements, subject to the agreed facility terms and ongoing lender requirements.

This case demonstrates how specialist securities-backed lending can provide alternative liquidity solutions for clients with concentrated listed equity holdings where conventional lending may not be suitable. Each transaction is assessed individually, with available leverage and terms dependent on the underlying assets, market conditions, lender criteria and the borrower’s circumstances.

Important Information

This case study is anonymised and provided for illustrative purposes only. It does not constitute financial, legal, tax or investment advice. Enness does not provide advice or recommendations on investments or Securities-Backed Lending. Lender introductions are unregulated. Clients should seek independent professional advice before entering into any financing arrangement.

Risk Warning

The value of shares and other investments can fall as well as rise, and you may receive back less than your original investment. Where borrowing is secured against investments, a fall in the value of the underlying assets may result in additional collateral requirements, margin calls or the sale of pledged assets, depending on the terms of the facility. Failure to meet repayment obligations may result in the loss of secured assets.

Disclaimer

Finance is subject to status, underwriting, asset suitability, valuation, market conditions, jurisdiction and lender criteria. Loan-to-value ratios, facility structures, pricing and other terms are indicative only and are not guaranteed. Outcomes will vary depending on individual circumstances and the lender’s assessment.