Customized financing. With structured loans.

Customized financing through structured loans

Through structured loans, ultra-high net worth clients and experienced, financially sound investors can use financial solutions adapted to their individual needs. In doing so, the existing portfolio serves as collateral for the loan. This enables the generation of new liquidity in order to increase the securities portfolio or to implement individual hedging strategies for their own assets, for example. All this without having to sell existing investments.

Individual solutions for varied needs

Structured loans enable the monetization of strategic investments without having to sell them. Our experts support you with customized solutions for all asset classes. This individual financing is ideally tailored to the personal situation and the risk profile of the client. Our services include, for example:

• Secured funding via concentrated bond or equity portfolios.
• Loans covered by private equity fund units.
• Pre-IPO financing or financing against non-listed equities for short- to medium-term liquidity procurement.
• Financing of strategic equity derivatives for the implementation of hedging strategies, such as put-strike lending or collars.

Financing private equity investments with structured loans

Alternative investments, especially private equity, are becoming increasingly important for the portfolios of ultra-high net worth investors. We are also noticing this trend in discussions with clients. The percentage share of alternative investments in the overall portfolio is increasing.

Meanwhile, the asset class continues to grow. According to the 2020 Preqin Global Private Equity & Venture Capital Report, around USD 4 trillion are now managed in private equity funds. This offers expanded investment opportunities for which investors can benefit from a loan overlay. Three examples of client needs in this regard:

Bridge financing of capital calls

Clients whose funds are covered by a small number of limited partners can use outstanding obligations of the latter as collateral for short-term bridge financing. These types of structured loans allow the fund to make investments on an ongoing basis without having to immediately request the capital from the partners. The periodic capital call to the partners reduces the administrative expenses of the fund and, at the same time, simplifies the partners' cash flow planning. In addition, this usually also provides operational benefits as well as better returns (IRR).

Using limited partnership units of private equity funds as collateral

In this case, clients pledge their units of various private equity funds and use them as collateral for financing. This enables them to draw liquidity from the fund. Said liquidity, for instance, can be used for additional investments in private equity funds or other asset classes, for servicing outstanding capital calls, or for improving returns. Among other things, such a credit solution requires in-depth legal clarification, e.g. in connection with the pledging and valuation of the private equity fund units.

Prefinancing of fund managers' management fees

This type of financing for private equity fund managers is primarily secured by the fees of the fund, which the managers receive at regular intervals. Additional collateral is required, depending on the structure and the risk. This solution allows fund managers to generate liquidity for other investments or, if needed, to participate in the fund via co-investments.

Experts will develop the ideal solution for each client based on the individual cash flow and the investment needs. Our structured lending team has many years of experience in advising ultra-high net worth clients and SFOs.