Key Facts:
- Client: Limited Partner (LP)
- Loan Amount: £4,000,000
- LTV: 50%
- Share Type: Charge over LP’s carried interest in VC Funds
- Interest Rate: 2.5% over BoE base rate
- Term: 4 years
Lombard loans, also know as securities-backed lending, refer to the mechanism of using stocks, shares and various other financial instruments as collateral for a loan. Borrowers put forward equities, investment funds, bonds, and securities that are pledged to a lender. In return, the lender will offer a credit line using the securities as collateral. A Lombard loan is usually a relatively short-term finance option, lasting from a few days up to around five years. The credit line extended by the lender can be used at any moment during the loan term.
In this case, we were approached by a Limited Partner (LP), namely, a High Net Worth Individual (HNWI), of a VC (venture capital) firm focused on technology and internet startup companies in Europe. Having invested significant capital in the VCs funds, the client was looking to use the carried interest to generate extra liquidity.
Lombard loans are particularly advantageous because they allow you to access the capital you have tied up in your securities without having to resort to selling them to generate the liquidity you need. This type of lending is particularly quick, with the underwriting process moving much faster than other types of lending, allowing you to access funds in days or a couple of weeks.
Lenders will focus on the key elements of the deal including the securities you will use as collateral, your exit and how affordable monthly repayments are, rather than many other aspects of your finances as is common in other types of lending, which is what makes the underwriting process so lean.
Here at Enness, we will source finance and negotiate with the lenders, no matter how complex your scenario. As well as securing a competitive rate, we were also able negotiate the best terms which met the client's requirements and were structured in the most advantageous way.
Supporting you every step of the way and always acting in your best interests, Enness is able to broker very significant loans and negotiate loans that would be impossible to secure operating alone. To discuss your scenario, get in touch today.
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.
