Single Stock Loan For SGD30m For A Singaporean High-Net-Worth Individual

Single Stock Loan for SGD30m For A Singaporean High-Net-Worth Individual

Single Stock Loan For SGD30m For A Singaporean High-Net-Worth Individual

Case Overview:

• Client Location: Singapore
• Ultimate Beneficial Owner (UBO): Wealthy investor
• Loan Amount: SGD 30,000,000
• Loan-to-Value (LTV): 55%
• Share Type: Shares listed on the Singapore Exchange (SGX)
• Interest Rate: 4.5% per annum

Context and Purpose:

In Singapore, where sophisticated investors strategically optimize their portfolios, single stock loans become pivotal tools for creating liquidity, exploring new ventures, or acquiring assets. Our client, a high-net-worth individual prominent in Singapore’s finance sector, sought a SGD 30 million loan against shares listed on the Singapore Exchange.

Company Profile:

• Company Type: Financial services firm
• Market Capitalization: SGD 3 billion
• Stock Exchange Listing: Singapore Exchange (SGX)

Challenges Faced:

Despite the client’s success and the financial services firm’s robust market position, the client’s shares, valued at approximately SGD 50 million, faced specific constraints. Overcoming these limitations posed challenges in securing a loan against the shares.

Loan Structure and Solution:

To navigate Singapore’s unique financial landscape, a specialized stock loan with a 55% Loan-to-Value (LTV) ratio was structured. This approach allowed the UBO to maintain equitable rights to the shares throughout the loan term. The loan featured a fixed interest rate of 4.5% per annum for a five-year term, reflecting the client’s preference for a competitive interest rate that aligned with market conditions.

Benefits of Stock Loan:

• Retained Equity: The UBO maintained ownership rights and benefits associated with the shares, aligning with their long-term investment goals.
• Flexibility: The stock loan provided flexibility, enabling the borrower to potentially capitalize on future share appreciation.
• Risk Mitigation: Despite the conservative LTV, the loan structure provided a viable financial solution, mitigating risks associated with the shares.

Complexity and Transactional Involvement:

Single stock loans inherently involve complexity, demanding meticulous attention to detail. Navigating the intricacies of the deal, addressing Singapore-specific constraints, and ensuring regulatory compliance required a comprehensive understanding of the local financial landscape.

Outcome and Long-Term Impact:

This case exemplifies the strategic use of single stock loans in Singapore, with a focus on a high-net-worth individual in the finance sector. Despite specific constraints, a tailor-made stock loan, featuring a competitive 4.5% interest rate, provided liquidity while preserving ownership rights. The financial solution aligned with the client’s investment objectives, showcasing the adaptability and effectiveness of single stock loans in the Singapore market. The client utilized the funds to explore new investment opportunities, contributing to the continued growth of their diversified portfolio.