Key Details
- US Resident/National
- Net worth: $10 million +
- Shareholding in an international Listed company with a market cap of circa $440 million
- Financing requirements: $4 Million
- Terms offered: 3-year term (24-month lock-in) at 3.09% interest per annum
In this case, we assisted an ultra-high-net worth individual in securing a non-recourse, single-stock loan on their holding of the listed stock in order to pursue additional investment opportunities.
The client was an entrepreneur who had amassed over ten million US dollars in fortune over a short period. Their wealth was predominantly held in real estate and stock listed on the Stock Exchange of Thailand, a classic case of a single stock loan. Additionally, they opted for a pledge scenario rather than having to disclose the change in beneficial ownership to the stock market. In this case, the stock is transferred to a 3rd party custodian such as HSBC or JPM, whereby the lender nor the borrower can touch the stock for the duration of the loan. This gives comfort to the borrower that their stock isn't being controlled or shorted.
Single Stock Loans can create liquidity, buy assets, purchase a property or reinvest in a new investment opportunity that may offer better returns than the original shareholding. Individuals, families and business owners whose wealth is tied up in a business often use single-stock loans to expand and diversify their investment portfolio.
They operate similarly to a typical Lombard loan, but because of our network of lenders, we can offer conditions better suited to our client's needs. The shares will typically serve as the primary form of security for a lender because they are generally non-consequence, giving a borrower the freedom to walk away from a loan if, among other things, a margin call is violated or if they choose not to repay it in full at maturity with no recourse to their own assets. Single-stock loan pricing has been regarded as quite competitive in the present market environment. In some cases, clients have chosen a single-stock loan for a property purchase over a mortgage.
With this particular case we were able to secure a loan amount of $4 Million USD at a loan-to-value ratio of 50%, payable in a single tranche at an interest rate of 3.09% fixed over a 3-year term.
The client also retained all dividends and voting rights.
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.
