Case Study · Singapore

Large fund needed an urgent short-term loan to subscribe for rights issue

10 January 2023

Large fund needed an urgent short-term loan to subscribe for rights issue

Urgent Financing Secured by Major Fund: Rights Issue Subscription Made Possible with Short-Term Loan

A large investment fund, facing time-sensitive subscription deadlines, successfully secured a short-term loan to fulfill their obligation to subscribe for a rights issue. The quick and efficient loan process allowed the fund to maintain their position and continue to drive growth in the market.

Rikvin Capital, a lender known for providing asset backed financing solutions to various industries, was approached by a large investment fund. The fund was facing a time-sensitive deadline to subscribe for a rights issue and was in need of financing to fulfill their obligation. The fund was faced with the challenge of an impending end-of-life scenario, and instead of trying to raise more money from their large LP, they decided to take the route of borrowing.

Rikvin Capital was able to provide the necessary funding through a short-term loan. The loan process was quick and efficient, allowing the investment fund to meet their subscription deadline and maintain their position in the market. The funding allowed the fund to continue to drive growth and pursue their long-term investment strategy.

The investment fund was grateful for Rikvin Capital’s assistance and was pleased with the outcome. Rikvin Capital was able to provide the financing solution that the fund needed, and the loan allowed the fund to overcome their short-term cash flow challenge. The successful loan secured the investment fund’s position and allowed them to continue to operate and drive growth in the market.

  • Location: Singapore
  • Market Value: $32,000,000.00
  • Loan Amount: $4,000,000.00
  • Loan-to-Value: 13%
  • Duration of Loan: 6 Months
  • Payment Schedule: Monthly
  • Asset Type: Share pledge from fund with net assets worth more than USD 32M
  • Completion Time: 2 Weeks

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FAQ

Can I borrow against a share pledge for a rights issue or corporate action?

Yes. The fund case here borrowed $4 million against a share pledge (worth more than $32 million in net assets) to subscribe to a time-sensitive rights issue. Share-pledge facilities are well-suited to corporate-action deadlines that traditional banks cannot meet.

What types of share collateral does Rikvin Capital accept?

We accept liquid listed securities, fund unit pledges and certain unlisted holdings where the underlying assets are well-documented. The fund case here pledged units in a fund with audited net assets above $32 million. We assess marketability, concentration and any lock-up restrictions before pricing.

How is the loan-to-value calculated on a share pledge?

Share-pledge loan-to-value is conservative by nature. The rights-issue case lent at 13% loan-to-value, which is typical for diversified fund units. Concentrated single-name listed equity attracts lower loan-to-value still; the more liquid and diversified the collateral, the more we can lend.

Can a fund use short-term lending instead of calling on LP commitments?

Yes. For end-of-life funds, time-sensitive corporate actions, or where the GP would rather not draw on uncalled LP commitments, a short-term loan against fund assets is a common alternative. The fund here used this route to meet a subscription deadline without disturbing its LP base.