Responding to Market Uncertainty: Equities First’s Financial Maneuvering

With over fourteen years of experience, Equity First Holdings has firmly established itself as a leader in alternative international shareholder financing solutions. With nine offices around the world, including the global financial hubs of London, Hong Kong, Singapore, Bangkok, and Sydney, Equities First Holdings has nearly 700 transactions for clients such as ultra high-net worth individuals as well as global corporations. The best Financial institutions and banks have recently tightened their lending criteria and as a result, there has been a significant increase in stock-based loans with equity lending becoming one of the more popular alternatives. As such, borrowers have been using their own stock as collateral when securing working capital for a loan.Because they provide a hedge, stock-based loans help a borrower effectively lower his or her investment risk. As a result, clients gain expedited access to liquidity for below-market rates if their collateral is based on publicly traded shares.

Stock-based loans offer a greater loan-to-value ratio compared to margin loans in addition to a fixed interest rate. This method leads to certainty for the life of the transaction. Market fluctuation during a three-year loan term is a predictable reality, but with the non-recourse feature available from a stock-based loan, a borrower can always walk away from the transaction, even if the value depreciates.The terms margin loan and stock-based loan are often used interchangeably, but Equity’s Founder and CEO Al Christy notes the significant differences. To obtain a margin loan, a borrower has to be pre-qualified just like a bank loan.

The interest rates tend to vary with the borrower expecting loan-to value ratios between 10 and 50 percent. Furthermore, liquidation of the borrower’s collateral without warning from the lending firm is a serious possibility if there is a margin call.Given the global implications of Brexit and the ensuing financial austerity measures, lenders need to be innovative in their approach to cater to the requirements of its clients in a fragile market and Equities First offers something both creative and sound. Christy believes his company’s alternative approach is progress manifest and has over $1.4 billion in transactions to back up his claim.

Leave a Reply