Securitize a low-volume loan backed by collateral and enable the certificate to be sold to multiple investors.

Advantages

Borrower

  • Various payoff possibilities
  • No withholding tax
  • Feasible for low amounts
  • No dilution for existing shareholders​

Investor

  • Various payoff possibilities
  • Less credit risk (due to pledge on property)
  • No withholding tax
  • Trustee realizes the collateral in a credit event and pays the proceeds to the issuance vehicle

How that works

In this case study, a hotel group that was looking to finance a new hotel project consulted with a family office to evaluate its options. But none of the alternatives seemed attractive:

  • A conventional bank loan was considered too expensive.
  • The amount needed – CHF 25 million – was too low to justify a bond issue.
  • Diluting existing shareholders by raising equity capital was not acceptable.

Working with GenTwo, however, the company discovered a truly compelling solution: a custom-designed, tradable certificate using its private loan as the underlying asset. Not only did this new approach offer a flexible solution, but it also proved to be the most cost-effective choice, even for this relatively low amount.

In addition to setting up the issuance vehicle and certificate, GenTwo's services included producing the term sheet that defined the payment terms of the note, as well as the duration, the exact coupon frequency, and interest payments.

The company was thus able to finance its project very efficiently, without any complications. What’s more, the family office was able to offer its clients a new investment vehicle, one that allowed these investors to participate in a property-backed project with an advantageous return.

“It was a win-win-win: The hotel group got its financing, the family office got the chance to make full use of its network, and the investors got an attractive investment.”
– Toni Barros, Key Account Manager, GenTwo

Securitizing a low-volume loan backed by collateral and enabling this certificate to be sold to multiple investors is a new and exciting service that GenTwo is offering. In particular, family offices, independent asset managers, and private banks can make full use of the potential of their networks, offering their clients a truly innovative investment solution.

 

Project Financing (CLN) Setup

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