Raising Capital Against Securities, Real Estate and Luxury Assets

Liquidity and access to capital is always a competitive advantage, but it is likely to be especially so in 2023 when global markets are braced for volatility, potentially weak growth or a possible downturn in economic activity. However, periods of economic volatility can present opportunity and challenges in equal measure: some high-net-worth individuals will identify opportunities or investment opportunities at exceptional value, and others may need capital to solve short-term cash flow challenges, consolidate or restructure debt or to access liquidity.

In these cases, the faster you can access capital, the sooner you will be able to pursue the opportunities available to you or solve problems that arise. Using your existing assets such as securities, a property portfolio or luxury assets to raise capital without having to sell them will be advantageous as it will mean you can benefit from the potential future appreciation of the asset or give yourself time to dispose of the asset on a timescale that supports you getting the most value from the sale.

Raising Significant Finance Quickly: Options

Bridging Finance

Bridging loans can be used by individuals or businesses for personal or corporate projects, and this type of finance will allow you to raise significant capital quickly, using residential or commercial real estate as security for the loan. As well as using real estate in the UK as collateral for a bridging loan, you can release equity from high-value property abroad, which may be useful if you have a second home, holiday property, international buy-to-let investments or trophy property.

Bridging loans are flexible in the sense that they can only be used for a specific purpose, in the way a mortgage can only be used to purchase property, for example. Provided you have a quality asset, can document why you want a loan and how you plan to use it and manage funds, as well having a solid and documented exit plan, lenders can consider offering this type of finance in almost any scenario. Whatever your reason for borrowing, you will almost always benefit from a tailored loan that is structured to your requirements and negotiated to get the best rate and terms available, arranged via a broker.

Securities-Backed Lending

Portfolio finance also offers another route to raising significant capital quickly without having to sell your securities in order to raise liquidity. Lenders are used to moving fast and can assess a borrower’s securities and suitability for a loan and quickly complete the underwriting process and you can use finance in many different scenarios — from diversifying investments to buying property. You can use venture capital funds, private equity, investment funds, mutual funds, hedge funds, liquid portfolios and stock, pre-IPO stock, bonds, stock in private companies and a single line of stock as collateral for a loan.

Luxury Asset Finance

Luxury asset finance can be used in two ways: to raise the liquidity you need to buy luxury assets, or to unlock capital tied up in luxury assets you already own without having to dispose of them. Disposing of luxury assets means you can’t benefit from any potential appreciation of the asset in the future, and it is also time-consuming as they don’t always move off the market quickly, which may be challenging if you need to access capital quickly to make something happen or cover a short-term but non-critical funding gap.

We can arrange finance against car collections, art, jewelry, aircraft, and yachts, as well as in more niche areas: against wine, watch or jewelry collections for example. Arranging luxury asset finance is something of a niche area — specialist lenders operate in this space, and they are discerning. You plans for using the loan capital, how you manage the funds and your exit will all be scrutinised carefully as will the quality and provenance of the luxury assets you want to put forward as collateral.

How Enness Arranges Finance Using Luxury Assets, Securities or Property as Collateral

• We will work to maximise the amount you can borrow against your assets — whatever they are
• Access the whole market of lenders that will be able to offer you a loan to negotiate and secure the most competitive rates and terms available for your situation
• Explain and present your situation, plans and exit to lenders in the most advantageous light, ensuring underwriters have all the context they need to make a lending decision
• Optimise the loan around your existing structures, working with your advisers to do so and make sure it is as efficient as possible
• Release equity from international property or negotiate bridging loans where there is a multi-jurisdictional or cross-border element
• Raise capital to invest in an ambitious project or to solve an unusual or delicate problem which has made accessing finance a challenge
• Arrange a loan to meet a specific deadline — this is especially useful if you need capital to solve a problem

Your Assets are Global, and so is Finance

Today, most high-net-worth individuals have global assets and investments, be these in the form of securities, property or luxury assets. You may also be globally mobile, an expat, or want to raise capital for investments abroad rather than in your country of residence. While these scenarios are increasingly common, it’s still challenging to raise finance in any situation where there is any kind of cross-border elements if you are operating alone. This can be due to the unusual nature of the collateral (stocks listed on a small foreign stock exchange, for example) or because location you want to deploy the loan outside of your country main country of residence (releasing equity from a prime French property to consolidate existing debt in the UK, for example). As experts in arranging international, high-value finance, we can arrange bridging loans, securities-backed lending and luxury asset finance in scenarios where these is any kind of international or cross-border element, facilitating your access to significant loans and negotiating them to ensure they are the most competitive on the market.

How Much is it Possible to Borrow?

The value of the collateral you put forward, your financial situation, reason for borrowing and exit will — amongst other things — define how much you can borrow. Lenders offering securities-backed loans, bridging finance and luxury asset finance (each will be a specialist in their own area) can all offer very significant loans, but they will underwrite them on a case-by-case basis.

Bridging lenders typically offer around 60–75% LTV as standard, but there will be caveats and if you have especially ambitious plans or an unusual situation, they may offer less. Alternatively, we may be able to negotiate a slightly higher LTV in certain scenarios, especially if you are what a lender deems to be a very high-quality borrower with plenty of liquidity.

Similarly, in securities-backed lending and luxury asset finance deals, what you can borrow will depend on the securities or assets you put forward as collateral. 50% LTV is relatively standard in the current market, although a little more or less is sometimes possible, again, depending on your financial situation, background, plans and exit. Especially with securities-backed lending it is always important to consider LTV carefully, as a lower LTV will make you much less likely to incur margin calls, which is always to your advantage.

Enness does not give advice or recommendations on Securities-Backed Lending or Crypto-Backed Lending and lender introductions are unregulated.

Originally published at https://www.ennessglobal.com.