Focus / 03
Margin Loans
Liquidity against listed stakes without giving up control.
Loans secured on shares in listed companies where the shareholder does not want to sell, give up voting rights or board seats, or trigger disclosure.
The shares might be illiquid due to a lock-up agreement or other transfer and pledge restrictions, or an existing lender has decided not to roll over the loan after a material decline in the share price or stake value.
Typical scenarios
- A relatively big and illiquid stake in a listed company where the shareholder has liquidity needs but does not want to lose voting rights or trigger any disclosure
- The shares are locked up and cannot be transferred or pledged
- A margin or share-based loan that is in default or close to default after a decline in the value of the underlying shares
- A margin loan where the existing lender refuses to roll over the existing loan
What we look for
- Quality of the underlying listed company
- A structure that allows the shareholder to retain control except when an event of default occurs
- A structure that takes care of any disclosure, governance and tax considerations
Instruments
Margin and share-based loans, prepaid forwards or collars and other structures that combine financing and hedging.